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Economic Growth and Social Welfare: Operationalising Normative Social Choice Theory
Type: Book
ISBN: 978-0-44451-565-0

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Article
Publication date: 10 November 2014

David John Evans, Erhun Kula and Yoko Nagase

– The purpose of this paper is to estimate survey-based values of the elasticity of marginal social valuation of income, an important welfare parameter in cost-benefit analysis.

Abstract

Purpose

The purpose of this paper is to estimate survey-based values of the elasticity of marginal social valuation of income, an important welfare parameter in cost-benefit analysis.

Design/methodology/approach

A model relating equity welfare weights to income is developed, and iso-elasticity of marginal valuation of income is tested using survey data obtained from a sample of Turkish politicians who are instrumental in policy making.

Findings

Based on the survey feedback, formal statistical testing indicates that Turkish politicians, regardless of party allegiance, reveal preferences consistent with an iso-elastic marginal social valuation of income. The estimated value of the elasticity measure is close to unity for each of the political parties.

Originality/value

The originality of the paper is in terms of the survey method used to obtain from Turkish politicians estimates of the marginal social valuation of income. This welfare parameter is needed in the calculation of both social discount rates and welfare weights. The paper will be of interest to academics in the field of welfare economics as well as to practitioners involved in the appraisal of social projects and policies.

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Book part
Publication date: 6 August 2018

Eliav Danziger and Leif Danziger

This chapter analyzes the effects of introducing a graduated minimum wage in a model with optimal income taxation in which a government seeks to maximize social welfare

Abstract

This chapter analyzes the effects of introducing a graduated minimum wage in a model with optimal income taxation in which a government seeks to maximize social welfare. It shows that the optimal graduated minimum wage increases social welfare by increasing the low-productivity workers’ consumption and bringing it closer to the first-best. The chapter also describes how the graduated minimum wage in a social welfare optimum depends on important economy characteristics such as the government’s revenue needs, the social welfare weight of low-productivity workers, and the numbers and productivities of the different types of workers.

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Transitions through the Labor Market
Type: Book
ISBN: 978-1-78756-462-6

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Article
Publication date: 2 September 2014

D.P. Doessel and Ruth F. Williams

The purpose of this paper is to provide an exposition of the concepts relevant to measuring the economic effect of premature mortality and the conception of how the social…

Abstract

Purpose

The purpose of this paper is to provide an exposition of the concepts relevant to measuring the economic effect of premature mortality and the conception of how the social loss from premature mortality can be incorporated into social welfare measurement. None of the conventional welfare measures currently pick up this welfare signal.

Design/methodology/approach

Various concepts are examined in the conventional and “new” literatures of welfare measurement. Six Venn diagrams show how various concepts “fit together”.

Findings

This paper outlines a framework for measuring the economic effect of premature mortality in a conceptually appropriate way. Thus the paper shows how the welfare loss associated with premature mortality can be incorporated into social welfare measurement.

Research limitations/implications

Accurate premature mortality measurement is difficult but this data problem hardly limits this exercise. Sensitivity analyses can alleviate this measurement problem.

Practical implications

The main practical implication is that empirical applications are feasible. Time series data can be analysed from this conceptual framework to determine whether the problem of the social loss from premature mortality is improving through time, or worsening.

Social implications

Knowing the size of the welfare impact of premature mortality is useful not only on policy fronts concerning premature mortality prevention.

Originality/value

“New welfare measurement” has not yet been applied to the notion of the social loss from premature mortality.

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International Journal of Social Economics, vol. 41 no. 9
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 February 2004

Francisco J. Goerlich and Matilde Mas

This paper focuses on three (marginal?) questions surrounding the analysis of economic convergence and uses Spanish provinces as a means of illustration. The three…

Abstract

This paper focuses on three (marginal?) questions surrounding the analysis of economic convergence and uses Spanish provinces as a means of illustration. The three questions in hand are as follows. Given that the geographical units of analysis are usually quite different in economic size, is the weighting of economic units relevant in convergence analysis? The average per capita income of a given region, or country, is the first moment in the distribution of income, but what about the second moment, inequality, have we converged in inequality? An aggregate welfare index must take into account, at least, the evolution of the first two moments of the distribution of income, and so does the adjustment for inequality make important differences in the evolution of average per capita income? The answer to the first two questions is yes, but to the third it is clearly no.

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Journal of Economic Studies, vol. 31 no. 1
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 January 1997

John Quiggin

Reviews the discount rate controversy, and examines sustainability theory and optimal growth theory, tracing the rise in prominence of the former and the decline of the…

Abstract

Reviews the discount rate controversy, and examines sustainability theory and optimal growth theory, tracing the rise in prominence of the former and the decline of the latter. Presents the rule‐of‐thumb interpretation of sustainability criteria, and proposes a utilitarian approach, discussing its implications for uncertainty, discounting and social welfare.

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International Journal of Social Economics, vol. 24 no. 1/2/3
Type: Research Article
ISSN: 0306-8293

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Optimal Growth Economics: An Investigation of the Contemporary Issues and the Prospect for Sustainable Growth
Type: Book
ISBN: 978-0-44450-860-7

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Designing the New European Union
Type: Book
ISBN: 978-1-84950-863-6

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Article
Publication date: 9 November 2015

Camille Cornand and Frank Heinemann

In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same…

Abstract

Purpose

In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because the former is more informative about the likely behavior of others. This may lead to welfare-reducing “overreactions” to public signals as shown by Morris and Shin (2002). Recent experiments on games with strategic complementarities show that subjects attach a lower weight to public signals than theoretically predicted. The purpose of this paper is to reconsider the welfare effects of public signals accounting for the weights observed in experiments.

Design/methodology/approach

Aggregate behavior observed in experiments on games with strategic complementarities can be explained by a cognitive hierarchy model where subjects employ limited levels of reasoning. They respond in a rational way to the non-strategic part of a game and they account for other players responding rationally, but they neglect that other players also account for others’ rationality. This paper analyzes the welfare effects of public information under such limited levels of reasoning.

Findings

In the model by Morris and Shin (2002) public information is always welfare improving if strategies are derived from such low reasoning levels. The optimal degree of publicity is decreasing in the levels of reasoning. For the observed average level of reasoning, full transparency is optimal, if public information is more precise than private information. If the policy maker has instruments that are perfect substitutes to private actions, the government should secretly respond to its information without disclosing or signaling it to the private sector independent of the degree of private agents’ rationality.

Originality/value

This paper takes experimental evidence back to theory and shows that the main result obtained by the theory under rational behavior breaks down if theory accounts for the bounded rationality observed in experiments.

Details

Journal of Economic Studies, vol. 42 no. 6
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 September 2006

Haluk Sezer

This paper aims to estimate a set of welfare weights for Turkey, based on per capita regional incomes, and to present them for possible policy consideration by the government.

Abstract

Purpose

This paper aims to estimate a set of welfare weights for Turkey, based on per capita regional incomes, and to present them for possible policy consideration by the government.

Design/methodology/approach

An important component of the regional welfare weight measure is the elasticity of marginal utility of income (e), and it is estimated using a tax‐based method incorporating the principle of equal absolute sacrifice of satisfaction.

Findings

The estimated measure of e for Turkey is 1.25, and this value, in combination with per capita income levels, produces measured regional welfare weights for the poorest provinces that are over ten times as high as those for the richest provinces.

Research limitations/implications

A lack of suitable data makes it difficult to use alternative approaches to the tax‐based method for the purpose of cross checking results for e. Results based on these other approaches involving behavioural evidence are presented for some other countries for comparison purposes.

Originality/value

This paper presents estimates of regional welfare weights for Turkey based on sound economic principles. It will be of interest to academics who are concerned with issues relating to cost‐benefit analysis as well as practitioners who are involved in the allocation of public funds to different regions in Turkey.

Details

Journal of Economic Studies, vol. 33 no. 5
Type: Research Article
ISSN: 0144-3585

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