Conditions for extrapolating differences in consumption to differences in welfare.
We characterize conditions under which a better consumption distribution implies higher welfare. Specifically, here "better consumption" means first‐order stochastic dominance, and "higher welfare" means higher expected utility for every subpopulation of individuals with the same utility function. A...
| Publicado en: | Economic Inquiry Vol. 62; no. 3; pp. 1090 - 1105 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Jul2024
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=178020566&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 178020566 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Jul2024 vid: 62 iid: 3 pid: 480 pub: Wiley-Blackwell artinfo: ui: 178020566 10.1111/ecin.13224 ppf: 1090 ppct: 15 formats: fmt: – @attributes: type: T – @attributes: type: P size: 500KB tig: atl: Conditions for extrapolating differences in consumption to differences in welfare. aug: au: Zhao, Wei Kaplan, David M. affil: Department of Economics, University of Missouri, Columbia Missouri, , USA su: Social dominance Stochastic dominance Expected utility Utility functions Physical distribution of goods sug: subj: Social dominance Stochastic dominance Expected utility Utility functions Physical distribution of goods keyword: copula first‐order stochastic dominance rank invariance risk preferences copula first‐order stochastic dominance rank invariance risk preferences ab: We characterize conditions under which a better consumption distribution implies higher welfare. Specifically, here "better consumption" means first‐order stochastic dominance, and "higher welfare" means higher expected utility for every subpopulation of individuals with the same utility function. Although this implication seems natural, we first provide a counterexample wherein better consumption risk allocation outweighs lower consumption. We then show that higher expected utility results from higher consumption in different settings, including fixed dependence (fixed copula) between consumption and individual risk preferences, or alternatively using the rank invariance assumption from the treatment effects literature. These are discussed in several real‐world examples. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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