Social Choice and Welfare

, Volume 1, Issue 4, pp 263–272

On the relationship between the Hicksian measures of change in welfare and the Pareto principle

  • U. Ebert
Article

Abstract

The change of welfare for one individual can be measured by the compensating variation (CV) or equivalent variation; the change for a whole society can be evaluated by summing up the individual gains and losses (e.g. Σ CV). Generally there is no equivalence between the positive sign of this sum and a potential improvement for all individuals by redistribution of incomes. In this paper the Σ CV-measure is corrected in a manner such that the new measure is equivalent to the Pareto principle. This correction is defined in a general equilibrium framework and takes into account the attainability of allocations. Finally characterizations of compensation tests are derived.

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Copyright information

© Springer-Verlag 1985

Authors and Affiliations

  • U. Ebert
    • 1
  1. 1.Department of EconomicsUniversity of BonnBonn 1Germany

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