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Nicolas Treich - One of the best experts on this subject based on the ideXlab platform.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Journal of Health Economics, 2014Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk reduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the "value per statistical life" (VSL) approach—and various Social Welfare Functions (SWFs). The SWFs are either utilitarian or prioritarian, applied to policy choice under risk in either an "ex post" or "ex ante" manner. We examine the conditions on individual utility and on the SWF under which these frameworks display sensitivity to wealth and to baseline risk. Moreover, we discuss whether these frameworks satisfy related properties that have received some attention in the literature, namely equal value of risk reduction, preference for risk equity, and catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks. JEL: D81, D61, D63, Q51.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Social Science Research Network, 2012Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk-reduction. These frameworks include classical, distributively unweighted cost-benefit analysis — i.e., the “value per statistical life” (VSL) approach — and three benchmark Social Welfare Functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks, and we identify when the use of an ex ante or an ex post approach has different implications for risk policymaking.
Matthew D Adler - One of the best experts on this subject based on the ideXlab platform.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Journal of Health Economics, 2014Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk reduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the "value per statistical life" (VSL) approach—and various Social Welfare Functions (SWFs). The SWFs are either utilitarian or prioritarian, applied to policy choice under risk in either an "ex post" or "ex ante" manner. We examine the conditions on individual utility and on the SWF under which these frameworks display sensitivity to wealth and to baseline risk. Moreover, we discuss whether these frameworks satisfy related properties that have received some attention in the literature, namely equal value of risk reduction, preference for risk equity, and catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks. JEL: D81, D61, D63, Q51.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Social Science Research Network, 2012Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk-reduction. These frameworks include classical, distributively unweighted cost-benefit analysis — i.e., the “value per statistical life” (VSL) approach — and three benchmark Social Welfare Functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks, and we identify when the use of an ex ante or an ex post approach has different implications for risk policymaking.
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inequality and uncertainty theory and legal applications
University of Pennsylvania Law Review, 2006Co-Authors: Matthew D Adler, Chris William SanchiricoAbstract:"Welfarism" is the principle that Social policy should be based solely on individual well-being with no reference to "fairness" or "rights." The propriety of this approach has recently been the subject of extensive debate within legal scholarship. Rather than contributing (directly) to this debate, we identify and analyze a problem within welfarism that has received far too little attention. Call this the "ex ante/ex post" problem. The problem arises from the combination of uncertainty - an inevitable feature of real policy choice - and a Social preference for equality. If the policymaker is not a utilitarian, but rather has a "Social Welfare Function" that is equity-regarding to some degree, then she faces the following choice: Should she care about the equalization of expected well-being (the ex ante approach), or should she care about the expected equalization of actual well-being (the ex post approach)? Should she focus on the equality of prospects or the prospects for equality?In this Article, we bring the ex ante/ex post problem to the attention of legal academics, provide novel insight into when and why the problem arises, and highlight legal applications where the problem figures prominently. We ultimately conclude that welfarism requires an ex post approach. This is a counterintuitive conclusion because the ex post approach can conflict with ex ante Pareto superiority. Indeed, the Article demonstrates that the ex post application of every equity-regarding Social Welfare Function - whatever its particular form - must conflict with ex ante Pareto superiority in some choice situations. Among other things, then, the Article shows that legal academics must abandon either their commitment to welfarism or their commitment to ex ante Pareto superiority.
James K Hammitt - One of the best experts on this subject based on the ideXlab platform.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Journal of Health Economics, 2014Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk reduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the "value per statistical life" (VSL) approach—and various Social Welfare Functions (SWFs). The SWFs are either utilitarian or prioritarian, applied to policy choice under risk in either an "ex post" or "ex ante" manner. We examine the conditions on individual utility and on the SWF under which these frameworks display sensitivity to wealth and to baseline risk. Moreover, we discuss whether these frameworks satisfy related properties that have received some attention in the literature, namely equal value of risk reduction, preference for risk equity, and catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks. JEL: D81, D61, D63, Q51.
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the Social value of mortality risk reduction vsl vs the Social Welfare Function approach
Social Science Research Network, 2012Co-Authors: Matthew D Adler, James K Hammitt, Nicolas TreichAbstract:We examine how different welfarist frameworks evaluate the Social value of mortality risk-reduction. These frameworks include classical, distributively unweighted cost-benefit analysis — i.e., the “value per statistical life” (VSL) approach — and three benchmark Social Welfare Functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks, and we identify when the use of an ex ante or an ex post approach has different implications for risk policymaking.
Peter A Diamond - One of the best experts on this subject based on the ideXlab platform.
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optimal taxation and public production ii tax rules
The American Economic Review, 2016Co-Authors: Peter A Diamond, James A MirrleesAbstract:set out the problem of using taxation and government production to maximize a Social Welfare Function. We derived the first-order conditions, and considered the argument for efficiency in aggregate production. Here in Part II we consider the structure of optimal taxes in more detail. Part I contained five sections, and Part II begins at Section VI. In the sixth and seventh sections we consider commodity taxation in one- and many-consumer economies. In the eighth section we consider other kinds of taxes; and in the ninth, public consumption. In the tenth section we consider a rigorous treatment of the problem, giving a sufficient condition for the validity of the first-order conditions. To begin, we shall restate the notation and basic problem. Notation
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the case for a progressive tax from basic research to policy recommendations
Journal of Economic Perspectives, 2011Co-Authors: Peter A Diamond, Emmanuel SaezAbstract:The fair distribution of the tax burden has long been a central issue in policyhe fair distribution of the tax burden has long been a central issue in policymaking. A large academic literature has developed models of optimal tax making. A large academic literature has developed models of optimal tax theory to cast light on the problem of optimal tax progressivity. In this theory to cast light on the problem of optimal tax progressivity. In this paper, we explore the path from basic research results in optimal tax theory to paper, we explore the path from basic research results in optimal tax theory to formulating policy recommendations. formulating policy recommendations. Models in optimal tax theory typically posit that the tax system should maximize a Models in optimal tax theory typically posit that the tax system should maximize a Social Welfare Function subject to a government budget constraint, taking into account Social Welfare Function subject to a government budget constraint, taking into account that individuals respond to taxes and transfers. Social Welfare is larger when resources that individuals respond to taxes and transfers. Social Welfare is larger when resources are more equally distributed, but redistributive taxes and transfers can negatively are more equally distributed, but redistributive taxes and transfers can negatively affect incentives to work, save, and earn income in the fi rst place. This creates the clasaffect incentives to work, save, and earn income in the fi rst place. This creates the classical trade-off between equity and effi ciency which is at the core of the optimal income sical trade-off between equity and effi ciency which is at the core of the optimal income tax problem. In general, optimal tax analyses maximize Social Welfare as a Function of tax problem. In general, optimal tax analyses maximize Social Welfare as a Function of individual utilities—the sum of utilities in the utilitarian case. The marginal weight for individual utilities—the sum of utilities in the utilitarian case. The marginal weight for a given person in the Social Welfare Function measures the value of an additional dollar a given person in the Social Welfare Function measures the value of an additional dollar of consumption expressed in terms of public funds. Such Welfare weights depend on of consumption expressed in terms of public funds. Such Welfare weights depend on the level of redistribution and are decreasing with income whenever society values the level of redistribution and are decreasing with income whenever society values more equality of income. Therefore, optimal income tax theory is fi rst a normative more equality of income. Therefore, optimal income tax theory is fi rst a normative theory that shows how a Social Welfare objective combines with constraints arising from theory that shows how a Social Welfare objective combines with constraints arising from limits on resources and behavioral responses to taxation in order to derive specifi c limits on resources and behavioral responses to taxation in order to derive specifi c
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Social security investment in equities
The American Economic Review, 2003Co-Authors: Peter A Diamond, John GeanakoplosAbstract:This paper explores the general-equilibrium impact of Social security portfolio diversification into private securities, either through the trust fund or private accounts. The analysis depends critically on heterogeneities in saving, production, assets, and taxes. Limited diversification weakly increases interest rates, reduces the expected return on short-term investment (and the equity premium), decreases safe investment, increases risky investment, and increases a suitably weighted Social Welfare Function. However, the effects on aggregate investment, long-term capital values, and the utility of young savers hinges on assumptions about technology. Aggregate investment and long-term asset values can move in opposite directions. (JEL H55)
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integrating punishment and efficiency concerns in punitive damages for reckless disregard of risks to others
Journal of Law Economics & Organization, 2002Co-Authors: Peter A DiamondAbstract:Justifications for the use of punitive damages refer to deterrence and punishment. After formulating a Social Welfare Function that incorporates both economic efficiency and a desire for retribution, optimal punitive damages are considered to balance concerns for economic efficiency and for retribution. This optimal balancing is considered where compensatory damages alone provide the correct level of deterrence, allowing the ideal retribution to vary with the level of wealth and with the level of precaution. The analysis is extended to situations where some accidents do not result in liability.
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Social security investment in equities
Research Papers in Economics, 2001Co-Authors: Peter A Diamond, John GeanakoplosAbstract:This paper explores the general equilibrium impact of Social security portfolio diversification into private securities, either through the trust fund or private accounts. The analysis depends critically on heterogeneities in saving, production, assets, and taxes. Limited diversification weakly increases interest rates, reduces the expected return on short-term investment (and the equity premium), decreases safe investment, increases risky investment and increases a suitably weighted Social Welfare Function. However, the effects on aggregate investment, long-term capital values, and the utility of young savers hinges on assumptions about technology. Aggregate investment and long-term asset values can move in opposite directions.
Tapan Mitra - One of the best experts on this subject based on the ideXlab platform.
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on Social Welfare Functions on infinite utility streams satisfying hammond equity and weak pareto axioms a complete characterization
Economic Theory Bulletin, 2015Co-Authors: Ram Sewak Dubey, Tapan MitraAbstract:This paper examines the problem of aggregating infinite utility streams with a Social Welfare Function that respects the Hammond Equity and Weak Pareto axioms. The paper provides a complete characterization of domains (of the one period utilities) on which such an aggregation is possible. A Social Welfare Function satisfying the Hammond Equity and Weak Pareto axioms exists on precisely those domains which are well-ordered sets in which the elements of the set are ordered according to the decreasing magnitude of the numbers belonging to the set. We show through examples how this characterization can be applied to obtain a number of results in the literature, as well as some new ones.
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sustainability and discounted utilitarianism in models of economic growth
Mathematical Social Sciences, 2010Co-Authors: Geir B Asheim, Tapan MitraAbstract:Discounted utilitarianism treats generations unequally and leads to seemingly unappealing consequences in some models of economic growth. Instead, this paper presents and applies sustainable discounted utilitarianism (SDU). SDU respects the interests of future generations and resolves intergenerational conflicts by imposing on discounted utilitarianism that the evaluation be insensitive to the interests of the present generation if the present is better off than the future. An SDU Social Welfare Function always exists. We provide a convenient sufficient condition to identify SDU optima and apply SDU to two well-known models of economic growth. We also investigate the axiomatic basis for SDU.
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aggregating infinite utility streams with intergenerational equity the impossibility of being paretian
Econometrica, 2003Co-Authors: Kaushik Basu, Tapan MitraAbstract:It has been known that, in aggregating infinite utility streams, there does not exist any Social Welfare Function, which satisfies the axioms of Pareto, intergenerational equity, and continuity. We show that the impossibility result persists even without imposing the continuity axiom, and in frameworks allowing for more general domains of utilities than those used in the existing literature.