The basic objectives of any aggregate welfare program are threefold: efficiency, equity and stability. In this paper, I discuss how constraints are imposed in a natural way over these conditions such that aggregate welfare distortions arise. There are three mitigating forces, namely: fiscal policy, monetary policy and regulatory policy. These are characterized from context to context.
{"title":"Aggregate Welfare Distortions and Foundations of Economic Policy","authors":"Indrajit Mallick","doi":"10.2139/ssrn.3581637","DOIUrl":"https://doi.org/10.2139/ssrn.3581637","url":null,"abstract":"The basic objectives of any aggregate welfare program are threefold: efficiency, equity and stability. In this paper, I discuss how constraints are imposed in a natural way over these conditions such that aggregate welfare distortions arise. There are three mitigating forces, namely: fiscal policy, monetary policy and regulatory policy. These are characterized from context to context.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120961033","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We introduce the constrained egalitarian surplus-sharing rule fCE, which distributes an amount of a divisible resource so that the poorer agents’ resulting payoffs become equal but not larger than any remaining agent’s status quo payoff. We show that fCE is characterized by Pareto optimality, nonnegativity, path independence, and less first, a new property requiring that an agent does not gain if her status quo payoff exceeds that of another agent by the surplus. We provide two additional characterizations weakening less first and employing consistency, a classical invariance property with respect to changes of population. We investigate the effects of egalitarian principles in the setting of transferable utility (TU) games. A single-valued solution for TU games is said to support constrained welfare egalitarianism if it distributes any increment of the worth of the grand coalition according to fCE. We show that the set of Pareto optimal single-valued solutions that support fCE is characterized by means of aggregate monotonicity and bounded pairwise fairness, resembling less first.
{"title":"Constrained Welfare Egalitarianism in Surplus-Sharing Problems","authors":"P. Calleja, Francesc Llerena, Peter Sudhölter","doi":"10.2139/ssrn.3526149","DOIUrl":"https://doi.org/10.2139/ssrn.3526149","url":null,"abstract":"We introduce the constrained egalitarian surplus-sharing rule fCE, which distributes an amount of a divisible resource so that the poorer agents’ resulting payoffs become equal but not larger than any remaining agent’s status quo payoff. We show that fCE is characterized by Pareto optimality, nonnegativity, path independence, and less first, a new property requiring that an agent does not gain if her status quo payoff exceeds that of another agent by the surplus. We provide two additional characterizations weakening less first and employing consistency, a classical invariance property with respect to changes of population. We investigate the effects of egalitarian principles in the setting of transferable utility (TU) games. A single-valued solution for TU games is said to support constrained welfare egalitarianism if it distributes any increment of the worth of the grand coalition according to fCE. We show that the set of Pareto optimal single-valued solutions that support fCE is characterized by means of aggregate monotonicity and bounded pairwise fairness, resembling less first.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127151719","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the present note we prove the first fundamental theorem of welfare economics, according to which all equilibrium allocations are Pareto optimal, for the standard pure exchange model with shares. In this context the social interaction among agents enters the definition of equilibrium only through the market clearing conditions, but it does not affect the agents’ maximization problem. We show that the first fundamental theorem of welfare holds true also when introducing stationary equilibria in relation to a share updating mechanism.
{"title":"The First Fundamental Theorem of Welfare in a General Equilibrium Evolutionary Setting","authors":"A. Naimzada, M. Pireddu","doi":"10.2139/ssrn.3420672","DOIUrl":"https://doi.org/10.2139/ssrn.3420672","url":null,"abstract":"In the present note we prove the first fundamental theorem of welfare economics, according to which all equilibrium allocations are Pareto optimal, for the standard pure exchange model with shares. In this context the social interaction among agents enters the definition of equilibrium only through the market clearing conditions, but it does not affect the agents’ maximization problem. We show that the first fundamental theorem of welfare holds true also when introducing stationary equilibria in relation to a share updating mechanism.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129527733","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper analyzes the effect of speculation on the economic welfare from various welfare criteria, using a simple Edgeworth box within a three-period competitive framework. Here “speculation” is defined as a series of transition processes of each agent’s spontaneous production of private information, the exchange of commodities based on it under the externality (i.e., symmetry breaking) environment, and finally its spillover into public. It is explicitly shown that the complete sharing of produced information under externality environment, if not accompanied by a positive productivity effect of the “right” decision, does not necessarily attain the non-negative economic value especially in terms of ex-ante expected utility. It is also shown that in the ex-ante sense the first theorem of welfare economics could break in the course of information production. Lastly some points about why this could happen are discussed.
{"title":"A Simple Model of Speculation as a Spontaneous Breaking of Symmetry - The Welfare Analyses and Some Problems in the Decision Making Theory","authors":"Takaaki Aoki","doi":"10.2139/ssrn.3431883","DOIUrl":"https://doi.org/10.2139/ssrn.3431883","url":null,"abstract":"This paper analyzes the effect of speculation on the economic welfare from various welfare criteria, using a simple Edgeworth box within a three-period competitive framework. Here “speculation” is defined as a series of transition processes of each agent’s spontaneous production of private information, the exchange of commodities based on it under the externality (i.e., symmetry breaking) environment, and finally its spillover into public. It is explicitly shown that the complete sharing of produced information under externality environment, if not accompanied by a positive productivity effect of the “right” decision, does not necessarily attain the non-negative economic value especially in terms of ex-ante expected utility. It is also shown that in the ex-ante sense the first theorem of welfare economics could break in the course of information production. Lastly some points about why this could happen are discussed.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115883026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many policy reforms involve gains for some voters at a cost borne by others, and voters may be asymmetrically informed about who gains and loses. This paper shows that the interaction of distributive politics and asymmetric information generates an adverse selection effect: when an uninformed voter contemplates many other voters supporting a policy, she suspects that she is unlikely to benefit from it. This suspicion induces voters to reject policies that would be selected if all information were public. We identify a form of "negative correlation" that is necessary and sufficient for this electoral failure.
{"title":"Adverse Selection in Distributive Politics","authors":"S. N. Ali, Maximilian Mihm, Lucas Siga","doi":"10.2139/ssrn.3579095","DOIUrl":"https://doi.org/10.2139/ssrn.3579095","url":null,"abstract":"Many policy reforms involve gains for some voters at a cost borne by others, and voters may be asymmetrically informed about who gains and loses. This paper shows that the interaction of distributive politics and asymmetric information generates an adverse selection effect: when an uninformed voter contemplates many other voters supporting a policy, she suspects that she is unlikely to benefit from it. This suspicion induces voters to reject policies that would be selected if all information were public. We identify a form of \"negative correlation\" that is necessary and sufficient for this electoral failure.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117144738","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-08-22DOI: 10.5771/9783845293509-291
M. Kaiser, L. Reisch
German Abstract: Das Papier berichtet uber eine empirische Studie, die sich mit Einstellungen von Verbrauchern zu Grunen- und Gesundheitsnudges beschaftigt. Es basiert auf einer reprasentativen Online-Studie in Deutschland im Allgemeinen und dem Land Baden-Wurttemberg im Speziellen. Die Probanden wurden gefragt, ob sie eine Liste von 15 Nudges, die in anderen Landern weltweit getestet wurden, "zustimmen" oder "nicht zustimmen". Insgesamt gibt es eine deutliche Mehrheit, die solches Nudges unterstutzt. Implikationen fur die Verbraucherpolitik werden diskutiert. English Abstract: The paper reports on an empirical study looking into people's attitudes towards green and health nudges. It is based on an online representative study in Germany in general and the State of Baden-Wuerttemberg in specific. Subjects were asked whether they "approve" or "do not approve" of a list of 15 nudges that have been tested in other countries worldwide. Overall, there is a marked majority that support those nudges in question. Implications for consumer policy are discussed.
{"title":"Kann man Nudging trauen? Wie man in Baden-Württemberg über verhaltensbasierte Stimuli denkt (Can Nudges Be Trusted? How People in Baden-Wuerttemberg Think about Behavior-Based Stimuli)","authors":"M. Kaiser, L. Reisch","doi":"10.5771/9783845293509-291","DOIUrl":"https://doi.org/10.5771/9783845293509-291","url":null,"abstract":"German Abstract: Das Papier berichtet uber eine empirische Studie, die sich mit Einstellungen von Verbrauchern zu Grunen- und Gesundheitsnudges beschaftigt. Es basiert auf einer reprasentativen Online-Studie in Deutschland im Allgemeinen und dem Land Baden-Wurttemberg im Speziellen. Die Probanden wurden gefragt, ob sie eine Liste von 15 Nudges, die in anderen Landern weltweit getestet wurden, \"zustimmen\" oder \"nicht zustimmen\". Insgesamt gibt es eine deutliche Mehrheit, die solches Nudges unterstutzt. Implikationen fur die Verbraucherpolitik werden diskutiert. \u0000English Abstract: The paper reports on an empirical study looking into people's attitudes towards green and health nudges. It is based on an online representative study in Germany in general and the State of Baden-Wuerttemberg in specific. Subjects were asked whether they \"approve\" or \"do not approve\" of a list of 15 nudges that have been tested in other countries worldwide. Overall, there is a marked majority that support those nudges in question. Implications for consumer policy are discussed.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"40 8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129140075","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In order for the assessment to be reliable, it should be carried out by specialists, using consistent modern standards of methodology. In addition, the information on the assessment results should be available to the main interested parties and should be considered by as wide range of specialists as possible, who are involved in the implementation, financing or development of the social program. Thus, the primary method, used to determine the efficiency of state programs for social support of the population, are the assessment studies of various performance indicators at all stages of implementation of the program. In particular, this concerns the following: – at the stage of development: the program project is assessed by qualitative indicators of the fixed in it basic value reference points (degree of compliance of the 138 objectives of the creators of the program with the objectives of the socio-economic development of the country, the declared legal norms and principles, as well as the expectations of the subjects of the program); – at the implementation stage: the efficiency of the program, expressed in qualitative indicators of the organizational, legal and management components in the implementation of the program (a condition for the efficient social state government appears to be the presence of an effective mechanism for coordination of the social impacts in state social service – an executor of the program); – at the final (assessment) stage: the program is assessed by quantitative indicators of the economic component of efficiency (correlation of the volume of services and their value in terms of limited human and material resources) and qualitative indicators (the degree of compliance of the objectives of managers and organizers of the program with the needs of the subjects of the program). Given the entire multi-aspect character of the assessment of the effectiveness of social programming and its product – the social program, in the context of the management by results, in compliance with the principle "what-if", according to the social work priorities, stemming from the dynamic changes within the social environment, we consider appropriate to offer a model for assessment of the effectiveness, based on the approach of "organizational effectiveness".
{"title":"Social Programming as a Possibility to Increase Social Efficiency","authors":"V. Terziev, V. Banabakova, M. Georgiev","doi":"10.2139/ssrn.3138151","DOIUrl":"https://doi.org/10.2139/ssrn.3138151","url":null,"abstract":"In order for the assessment to be reliable, it should be carried out by specialists, using consistent modern standards of methodology. In addition, the information on the assessment results should be available to the main interested parties and should be considered by as wide range of specialists as possible, who are involved in the implementation, financing or development of the social program. Thus, the primary method, used to determine the efficiency of state programs for social support of the population, are the assessment studies of various performance indicators at all stages of implementation of the program. In particular, this concerns the following: – at the stage of development: the program project is assessed by qualitative indicators of the fixed in it basic value reference points (degree of compliance of the 138 objectives of the creators of the program with the objectives of the socio-economic development of the country, the declared legal norms and principles, as well as the expectations of the subjects of the program); – at the implementation stage: the efficiency of the program, expressed in qualitative indicators of the organizational, legal and management components in the implementation of the program (a condition for the efficient social state government appears to be the presence of an effective mechanism for coordination of the social impacts in state social service – an executor of the program); – at the final (assessment) stage: the program is assessed by quantitative indicators of the economic component of efficiency (correlation of the volume of services and their value in terms of limited human and material resources) and qualitative indicators (the degree of compliance of the objectives of managers and organizers of the program with the needs of the subjects of the program). Given the entire multi-aspect character of the assessment of the effectiveness of social programming and its product – the social program, in the context of the management by results, in compliance with the principle \"what-if\", according to the social work priorities, stemming from the dynamic changes within the social environment, we consider appropriate to offer a model for assessment of the effectiveness, based on the approach of \"organizational effectiveness\".","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"64 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115652642","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies which social networks maximize trust and welfare when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and a social network determines the information each player has. The main contribution of the paper is the characterization of optimal networks under alternative assumptions about how information flows across a network. When a defection is observed only by the victim's connections, cohesive networks are Pareto efficient as they allow players to coordinate their punishments to attain high equilibrium payoffs. In contrast, when a defection is observed by the victim's direct and indirect connections, barely connected networks maximize the number of players that can punish a defection and are therefore efficient.
{"title":"Trust in Cohesive Communities","authors":"F. Balmaceda, Juan F. Escobar","doi":"10.2139/ssrn.3121653","DOIUrl":"https://doi.org/10.2139/ssrn.3121653","url":null,"abstract":"This paper studies which social networks maximize trust and welfare when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and a social network determines the information each player has. The main contribution of the paper is the characterization of optimal networks under alternative assumptions about how information flows across a network. When a defection is observed only by the victim's connections, cohesive networks are Pareto efficient as they allow players to coordinate their punishments to attain high equilibrium payoffs. In contrast, when a defection is observed by the victim's direct and indirect connections, barely connected networks maximize the number of players that can punish a defection and are therefore efficient.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"89 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116019123","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Decisions affecting the well-being of others are often made by groups rather than individuals. For example, management boards decide about mitigating emissions, political representatives decide on environmental policies, and voters cast their ballot on the participation in international treaties. I analyze group decisions on contributions to a public good and contrast them to individual decisions using a large online experiment. Participants decide about contributions to climate change mitigation - either individually or in groups. Groups use majority voting or a random dictator mechanism to determine the contributions of their members. I find that contributions are higher if choices are made in groups. In addition, subjects tend to less extreme choices in group decisions - even if individual preferences are aggregated via voting.
{"title":"Pro-Social Behavior by Groups and Individuals: Evidence from Contributions to a Global Public Good","authors":"Gert Pönitzsch","doi":"10.2139/ssrn.2940249","DOIUrl":"https://doi.org/10.2139/ssrn.2940249","url":null,"abstract":"Decisions affecting the well-being of others are often made by groups rather than individuals. For example, management boards decide about mitigating emissions, political representatives decide on environmental policies, and voters cast their ballot on the participation in international treaties. I analyze group decisions on contributions to a public good and contrast them to individual decisions using a large online experiment. Participants decide about contributions to climate change mitigation - either individually or in groups. Groups use majority voting or a random dictator mechanism to determine the contributions of their members. I find that contributions are higher if choices are made in groups. In addition, subjects tend to less extreme choices in group decisions - even if individual preferences are aggregated via voting.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117258148","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Inequity plays a fundamental role in the evaluation of social welfare in many dimensions. We revisit the concept of inequity, whether across states of world (uncertainty), across individuals (inequality) and across generations (intergenerational equity), using a common framework generalizing the discounted expected utilitarianism approach. We propose a general measure of welfare as equity equivalents and develop the corresponding inequity index. We then allow for different degrees of inequity aversion across the three dimensions to span a simplex of possible inequity preferences and relate it to the recent literature on this topic. We show that the ordering of aggregation across the different dimensions matters for welfare evaluations and that many welfare-theoretical approaches developed in the literature may be seen as special cases of this general framework.
{"title":"Welfare As Simple(X) Equity Equivalents","authors":"L. Berger, J. Emmerling","doi":"10.2139/ssrn.2947601","DOIUrl":"https://doi.org/10.2139/ssrn.2947601","url":null,"abstract":"Inequity plays a fundamental role in the evaluation of social welfare in many dimensions. We revisit the concept of inequity, whether across states of world (uncertainty), across individuals (inequality) and across generations (intergenerational equity), using a common framework generalizing the discounted expected utilitarianism approach. We propose a general measure of welfare as equity equivalents and develop the corresponding inequity index. We then allow for different degrees of inequity aversion across the three dimensions to span a simplex of possible inequity preferences and relate it to the recent literature on this topic. We show that the ordering of aggregation across the different dimensions matters for welfare evaluations and that many welfare-theoretical approaches developed in the literature may be seen as special cases of this general framework.","PeriodicalId":447936,"journal":{"name":"PSN: Social Choice & Welfare (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-03-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133194092","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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