Yew-Kwang Ng looks at pushing welfare economics towards a more complete analysis. The book covers not only the basic topics, but also advanced and new arguments. Traditional topics including Pareto optimality, welfare criteria, consumer surplus, social choice, externality and public goods are considered. In addition, Professor Ng looks at more advanced issues and discusses such new arguments as the quasi-Pareto criterion, the effects of the diamond effects on consumer surplus, economists' over-estimation of the costs of public spending, and his theory of the third best. The remarkable conclusion of treating a dollar as a dollar provides a powerful simplification of public policy formulation in general and in cost-benefit analysis in particular. The author attempts to make welfare economics more complete by discussing increasing returns, using the recent Yang-Ng framework of division of labour and by pushing welfare economics from the level of preference to that of welfare or happiness, making a reformulation of public policy necessary.
Preface
List of Abbreviations
List of Symbols
PART 1: INTRODUCTION
What is Welfare Economics?
Is Welfare Economics a Positive or Normative Study
Welfare versus Utility
Utility Measurability and Interpersonal Comparability
The Organisation of the Book
Summary
Appendix 1.1: Basic Value Judgements and Subjective Judgements of Fact
PART 2: PARETO OPTIMALITY
The Pareto Principle
The Conditions for Pareto Optimality
The Attainment of Pareto Optimality
Summary
Appendix 2.1: First-order Conditions for Pareto-optimality
PART 3: THE DIRECTION OF WELFARE CHANGE: WELFARE CRITERIA
The Debate on Compensation Tests
Taking Distribution into Account: Little's Criterion
The Inadequacy of Purely Distributional Rankings
Retreat to Purely Efficiency Comparisons
Quasi-Pareto Improvements
Conclusions
Summary
PART 4: THE MAGNITUDE OF WELFARE CHANGE: CONSUMER SURPLUS
The Origin of the Concept: Dupuit and Marshall
Hicks' Four Measures and the Average Cost Difference
Which Measure?
Aggregation over Commodities: The Issue of Path Dependency
Aggregation over Individuals: The Boadway Paradox
The Approximate Nature of Surplus Measurement
Consumer Surplus of Diamond Goods
Some uses of Surplus Measurements
Summary
Appendix 4.1: CV, EV or Marginal Dollar Equivalent
Appendix 4.2: Acceptability of the Marshallian Measure: The Benchmark Case of a Cobb-Douglas Utility Function
PART 5: SOCIAL CHOICE
Arrow's Impossibility Theorem
The Impossibility Propositions by Kemp-Ng and Parks
Can the Paradox of Social Choice be Resolved?
Revealing the Intensity of Preferences
A Dollar is a Dollar: A 90 per cent Solution to the Paradox of Interpersonal Cardinal Utility
The Possibility of a Paretian Liberal
Summary
Appendix 5.1: The Incompatability of Individualism and Ordinalism
PART 6: THE OPTIMAL DISTRIBUTION OF INCOME
Conceptual Determination of Optimal Distribution
Utility Illusion
Theories of Optimal Income Distribution and Taxation: Lerner and Mirrlees
Discussion
Concluding Remarks
Summary
PART 7: EXTERNALITY
The Concept and Classification of Externalities
Divergence from Optimality and the Tax/subsidy Solution
Other Solutions
The Conscience Effect
The Coase Theorem and Liability Rules
Summary
PART 8: PUBLIC GOODS
Basic Characteristics of Public Goods
Optimality Conditions and the Financing of Public Goods
An Incentive-compatible Mechanism for Preference Revelation
Income Distribution as a Peculiar Public Good: The Paradox of Redistribution
Economic Theories of Clubs
Summary
Appendix 8.1: The Paradox of Redistribution and the Paradox of Universal Externality
PART 9: FIRST, SECOND OR THIRD BEST?
The Theory of Second Best
Softening the Blow of Second Best
A Theory of Third Best
Towards a Third-best Policy
Summary
Appendix 9.1: A Dollar is Dollar - Efficiency, Equity and Third-best Policies
PART 10: BEYOND MARGINAL ANALYSIS: PERSPECTIVES FROM AN INFRAMARGINAL ANALYSIS OF THE DIVISION OF LABOUR
Towards a More Complete Welfare Economics
Marginal versus Inframarginal Analysis
Basic Inframarginal Analysis of the Division of Labour
The Devastating Implications of Increasing Returns on some Traditional Conclusions
The Smith Dilemma and its Resolution
The Pareto Optimality of General Equilibrium in the New Framework - the Role of Entrepreneurs
Welfare Economic Issues and the Division of Labour
Implications
Summary
Appendix 10.1: A Simple Model of the Yang-Ng Framework of Specialisation
PART 11: FROM PREFERENCE TO HAPPINESS
Preference Economics or Welfare Economics
Developments that have Prompted a Reconsideration
A Simplified Analysis of Welfare
Implications and Concluding Remarks
Summary
PART 12: CONCLUSION: TOWARDS A COMPLETE STUDY OF WELFARE
Further Considerations
Towards a Complete Study of Welfare
Summary
Appendix 12.1: Notes and References on some Advanced and Applied Topics
References and Author Index
Subject Index
References
YEW-KWANG NG holds a Personal Chair in Economics at Monash University, Australia, and has been a fellow of the Academy of Social Sciences in Australia since 1980. He has published in welfare economics, meso-economics, welfare biology, and collaborates with Professor Xiaokai Yang on an infra-marginal analysis of division of labour.
Description
Yew-Kwang Ng looks at pushing welfare economics towards a more complete analysis. The book covers not only the basic topics, but also advanced and new arguments. Traditional topics including Pareto optimality, welfare criteria, consumer surplus, social choice, externality and public goods are considered. In addition, Professor Ng looks at more advanced issues and discusses such new arguments as the quasi-Pareto criterion, the effects of the diamond effects on consumer surplus, economists' over-estimation of the costs of public spending, and his theory of the third best. The remarkable conclusion of treating a dollar as a dollar provides a powerful simplification of public policy formulation in general and in cost-benefit analysis in particular. The author attempts to make welfare economics more complete by discussing increasing returns, using the recent Yang-Ng framework of division of labour and by pushing welfare economics from the level of preference to that of welfare or happiness, making a reformulation of public policy necessary.
Contents
Preface
List of Abbreviations
List of Symbols
PART 1: INTRODUCTION
What is Welfare Economics?
Is Welfare Economics a Positive or Normative Study
Welfare versus Utility
Utility Measurability and Interpersonal Comparability
The Organisation of the Book
Summary
Appendix 1.1: Basic Value Judgements and Subjective Judgements of Fact
PART 2: PARETO OPTIMALITY
The Pareto Principle
The Conditions for Pareto Optimality
The Attainment of Pareto Optimality
Summary
Appendix 2.1: First-order Conditions for Pareto-optimality
PART 3: THE DIRECTION OF WELFARE CHANGE: WELFARE CRITERIA
The Debate on Compensation Tests
Taking Distribution into Account: Little's Criterion
The Inadequacy of Purely Distributional Rankings
Retreat to Purely Efficiency Comparisons
Quasi-Pareto Improvements
Conclusions
Summary
PART 4: THE MAGNITUDE OF WELFARE CHANGE: CONSUMER SURPLUS
The Origin of the Concept: Dupuit and Marshall
Hicks' Four Measures and the Average Cost Difference
Which Measure?
Aggregation over Commodities: The Issue of Path Dependency
Aggregation over Individuals: The Boadway Paradox
The Approximate Nature of Surplus Measurement
Consumer Surplus of Diamond Goods
Some uses of Surplus Measurements
Summary
Appendix 4.1: CV, EV or Marginal Dollar Equivalent
Appendix 4.2: Acceptability of the Marshallian Measure: The Benchmark Case of a Cobb-Douglas Utility Function
PART 5: SOCIAL CHOICE
Arrow's Impossibility Theorem
The Impossibility Propositions by Kemp-Ng and Parks
Can the Paradox of Social Choice be Resolved?
Revealing the Intensity of Preferences
A Dollar is a Dollar: A 90 per cent Solution to the Paradox of Interpersonal Cardinal Utility
The Possibility of a Paretian Liberal
Summary
Appendix 5.1: The Incompatability of Individualism and Ordinalism
PART 6: THE OPTIMAL DISTRIBUTION OF INCOME
Conceptual Determination of Optimal Distribution
Utility Illusion
Theories of Optimal Income Distribution and Taxation: Lerner and Mirrlees
Discussion
Concluding Remarks
Summary
PART 7: EXTERNALITY
The Concept and Classification of Externalities
Divergence from Optimality and the Tax/subsidy Solution
Other Solutions
The Conscience Effect
The Coase Theorem and Liability Rules
Summary
PART 8: PUBLIC GOODS
Basic Characteristics of Public Goods
Optimality Conditions and the Financing of Public Goods
An Incentive-compatible Mechanism for Preference Revelation
Income Distribution as a Peculiar Public Good: The Paradox of Redistribution
Economic Theories of Clubs
Summary
Appendix 8.1: The Paradox of Redistribution and the Paradox of Universal Externality
PART 9: FIRST, SECOND OR THIRD BEST?
The Theory of Second Best
Softening the Blow of Second Best
A Theory of Third Best
Towards a Third-best Policy
Summary
Appendix 9.1: A Dollar is Dollar - Efficiency, Equity and Third-best Policies
PART 10: BEYOND MARGINAL ANALYSIS: PERSPECTIVES FROM AN INFRAMARGINAL ANALYSIS OF THE DIVISION OF LABOUR
Towards a More Complete Welfare Economics
Marginal versus Inframarginal Analysis
Basic Inframarginal Analysis of the Division of Labour
The Devastating Implications of Increasing Returns on some Traditional Conclusions
The Smith Dilemma and its Resolution
The Pareto Optimality of General Equilibrium in the New Framework - the Role of Entrepreneurs
Welfare Economic Issues and the Division of Labour
Implications
Summary
Appendix 10.1: A Simple Model of the Yang-Ng Framework of Specialisation
PART 11: FROM PREFERENCE TO HAPPINESS
Preference Economics or Welfare Economics
Developments that have Prompted a Reconsideration
A Simplified Analysis of Welfare
Implications and Concluding Remarks
Summary
PART 12: CONCLUSION: TOWARDS A COMPLETE STUDY OF WELFARE
Further Considerations
Towards a Complete Study of Welfare
Summary
Appendix 12.1: Notes and References on some Advanced and Applied Topics
References and Author Index
Subject Index
References
Authors
YEW-KWANG NG holds a Personal Chair in Economics at Monash University, Australia, and has been a fellow of the Academy of Social Sciences in Australia since 1980. He has published in welfare economics, meso-economics, welfare biology, and collaborates with Professor Xiaokai Yang on an infra-marginal analysis of division of labour.
terte
terte
|