Abstract
To start our enquiry, let’s consider, in its fundamental elements, what theoretical welfare economics says about inequality and poverty. Social welfare is considered a function of individual and family incomes, since incomes have a meaningful and positive correlation with indexes of a good life, such as life expectancy at birth, health, food, housing, education, …, while consumptions are a more limited economic variable.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See Arrow and Scitovsky (1969) collection of essays by leading scholars on welfare economics.
- 2.
The preface briefly justifies this choice instead of considering (ordinal) utilities. Section 1.2 further considers this point.
- 3.
Of some interest is the so called “Attali Report” (2008) on the problems that a mature and developed economy (France) must face to enhance its development.
- 4.
A very old maxim says: Homo sine pecunia imago mortis.
- 5.
While in a theoretical framework the notion of “income” can be considered as a well specified entity, in applied economics “income” is a very elusive notion. For a thorough discussion of this notion Kaldor (1955, pp. 54–78) is still interesting and useful reading. Another (still) authoritative study on the notion of income and its measurement is Fisher (1937).
- 6.
Currently, it is under debate whether in real world economies, P.A. employees sometimes act in their personal interest.
- 7.
The so called Condorcet paradox is a well known example of Arrow’s general impossibility theorem. In some sense, the paradox proves the theorem in the simple form here presented.
- 8.
In the last 20 years, social choice theory has received increasing attention in literature on political economy. Though it is not considered in this monograph, the interesting contribution made by Ticchi and Vindigni (2009) is worth mentioning.
- 9.
This maximization entails problems of information incentive and performance; for further details see Reiter (1986).
- 10.
From a social and political viewpoint inequality and justice are interrelated human conditions. Rawls (1971) has much to say on this point; suffices here to quote him, when he states that justice is “…the basic structure of society”.
- 11.
From the American statistician Lorenz (1905).
- 12.
Note that H is independent of any welfare function. It is entirely based on statistical data.
- 13.
In economics, production is normally the result of applying many factors of production to a so called production function; thus, one starts from a vector of inputs to get a vector of outputs. In the model here presented, we do not consider physical inputs, we directly assume that these factors are bought by individual incomes and transformed into outputs measured by a scalar, i.e. social production.
References
Attali J (ed) (2008) Rapport de la Commission pour la libération de la croissance francaise, Paris
Basu K, López-Calva LF (2011) Functionings and capabilities. In: Arrow KJ, Sen AK, Suzumura K (eds) Handbook of social choice and welfare, vol 2. North-Holland, Amsterdam, pp 153–187
Campbell DE (1992) Equity, efficiency, and social choice. Clarendon Press, Oxford
Campbell DE, Kelly JS (2009) Uniformly bounded information and social choice. J Math Econ 45:415–421
Fehr E, Schmidt KM (2003) Theories of fairness and reciprocity: Evidence and economic applications. In: Dewatripont M, Hansen LP, Turnovsky SJ (eds) Advances in economics and econometrics, vol 1. Cambridge University Press, Cambridge, pp 208–257
Fisher I (1937) Income in theory and income taxation in practice. Econometrica 5:1–55
Fleurbaey M (2009) Beyond GDP: The Quest for a measure of social welfare. J Econ Lit 4:1029–1075
Geanakoplos J (2005) Three brief proofs of Arrow’s impossibility theorem. Econ Theor 26:211–215
Hurwicz L (1960) Optimality and information efficiency in resource allocation processes. In: Arrow KJ, Karlin S, Suppes P (eds) Mathematical methods in the social sciences, 1959. Stanford University Press, Stanford, pp 27–46
Hurwicz L (1972) On informationally decentralized systems. In: McGuire CB, Radner R (eds) Decision and organization. North-Holland, Amsterdam, pp 1–29
Hurwicz L (1986) On informational decentralization and efficiency in resource allocation mechanisms. In: Reiter S (ed) Studies in mathematical economics. Washington DC, The Mathematical Association of America, pp 238–350
Kaldor N (1955) An expenditure tax. Allen and Unwin, London
Mount K, Reiter S (1974) The informational size of message spaces. J Econ Theor 8:161–191
Nicola PC (2000) Mainstream mathematical economics in the 20th century. Springer, Berlin
Rawls J (1971) A theory of justice. Harvard University Press, Cambridge
Reiter S (1986) Informational incentive and performance in the new2 welfare economics. In: Reiter S (ed) Studies in mathematical economics. Washington DC, The Mathematical Association of America
Salles M (ed) (2005) Special issue. Soc Choice Welfare 25:229–564
Samuelson PA (1967) Arrow’s mathematical politics. In: Hook S (ed) Human values and economic policy: A symposium. New York University Press, New York, pp 167–177
Sen AK (1980) Equality of what? In: McMurrin S (ed) The Tanner lectures on human values, vol 1. Cambridge University Press, Cambridge
Sethuraman J, Teo C-P, Vohra RV (2006) Anonymous monotonic social welfare functions. J Econ Theor 128:232–254
Taylor AD (1995) Mathematics and politics. Springer, New York
Ticchi D, Vindigni A (2009) Endogenous constitutions. Econ J 120:1–39
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
Nicola, P. (2013). Overview. In: Efficiency and Equity in Welfare Economics. Lecture Notes in Economics and Mathematical Systems, vol 661. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-30071-4_1
Download citation
DOI: https://doi.org/10.1007/978-3-642-30071-4_1
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-30070-7
Online ISBN: 978-3-642-30071-4
eBook Packages: Business and EconomicsEconomics and Finance (R0)