Welfare Equivalent NNP and Habit Formation

This note concerns the importance of habit formation for social accounting. With internal habit formation, earlier procedures for welfare measurement in the first best apply with minor modifications. This result strengthens the idea behind using the comprehensive net national product as a welfare indicator. If, on the other hand, part of the habit formation is exogenous to each consumer, the exact welfare measure will also reflect the associated external effect.

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Year of publication:	2006-04-10
Authors:	Aronsson, Thomas ; Löfgren, Karl-Gustaf
Institutions:	Institutionen för Nationalekonomi, Umeå Universitet
Subject:	Social accounting \| habit formation \| welfare

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Extent:	application/pdf
Series:	Umeå Economic Studies.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series Umeå Economic Studies Number 680 7 pages
Classification:	D10 - Household Behavior and Family Economics. General ; D60 - Welfare Economics. General ; D62 - Externalities ; I31 - General Welfare; Basic Needs; Quality of Life
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005652001