On Shrinking the Planner's Choice Set in Multiple Wellbeing Comparisons

22 Pages Posted: 12 Dec 2016 Last revised: 16 Jan 2017

See all articles by Gordon Anderson

Gordon Anderson

University of Toronto

Thierry Post

Graduate School of Business of Nazarbayev University

Date Written: January 14, 2017

Abstract

Behind a Veil of Ignorance, the Social Planner's problem of choosing from a collection of diverse wellbeing distributions is akin to a problem of individual decision making under uncertainty. This interpretation provides a rationale for applying the concept of Stochastic Dominance Optimality in wellbeing analysis to detect the distributions with the highest levels of shared prosperity. A complementary concept of Stochastic Dominance Inferiority can be used to detect distributions with the greatest potential for poverty reduction. Linear Programming problems for implementing these twin concepts are derived from the first principles of Expected Utility. Empirical examples using aggregated distributions of income and wealth demonstrate the potential improvement upon the discriminatory power of multiple pairwise comparisons in the face of unbalanced economic growth.

Keywords: Welfare Economics, Choice Under Risk, Stochastic Dominance, Linear Programming

JEL Classification: C1, C6, D3, D6, D8, I3

Suggested Citation

Anderson, Gordon John and Post, Thierry, On Shrinking the Planner's Choice Set in Multiple Wellbeing Comparisons (January 14, 2017). Available at SSRN: https://ssrn.com/abstract=2883511 or http://dx.doi.org/10.2139/ssrn.2883511

Gordon John Anderson

University of Toronto ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada

Thierry Post (Contact Author)

Graduate School of Business of Nazarbayev University ( email )

53 Kabanbay Batyra Avenue
Astana, 010000
Kazakhstan

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
48
Abstract Views
365
PlumX Metrics