Aggregation of Utility and Equivalence Scales: A Solution to the Pangloss Critique
Definitions of equivalence scales are usually based on a household utility function. This may be founded on an assumption of the household maximizing a welfare function of individual utilities. Basing inter-household comparisons of welfare on this approach is fallacious because households put different weight on the utility of the various household members, a weighting that does not necessarily correspond to an ethically sound aggregation of utility. This is called the Pangloss critique. To solve the problem, I suggest keeping the model of household behavior, but to introduce a new function to aggregate the household members' utilities. Equivalence scales based on this approach are shown to have desirable properties. Copyright 2003 Blackwell Publishing Ltd..
Year of publication: |
2003
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Authors: | Lind, Jo Thori |
Published in: |
Review of Income and Wealth. - International Association for Research in Income and Wealth - IARIW. - Vol. 49.2003, 4, p. 555-568
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Publisher: |
International Association for Research in Income and Wealth - IARIW |
Saved in:
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