Welfare As Simple(X) Equity Equivalents

40 Pages Posted: 6 Apr 2017

See all articles by Loic Berger

Loic Berger

CNRS; IÉSEG School of Management, Lille Campus; RFF-CMCC European Institute on Economics and the Environment

Johannes Emmerling

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici - European Institute onEconomy and the Environment (EIEE)

Date Written: March 9, 2017

Abstract

Inequity plays a fundamental role in the evaluation of social welfare in many dimensions. We revisit the concept of inequity, whether across states of world (uncertainty), across individuals (inequality) and across generations (intergenerational equity), using a common framework generalizing the discounted expected utilitarianism approach. We propose a general measure of welfare as equity equivalents and develop the corresponding inequity index. We then allow for different degrees of inequity aversion across the three dimensions to span a simplex of possible inequity preferences and relate it to the recent literature on this topic. We show that the ordering of aggregation across the different dimensions matters for welfare evaluations and that many welfare-theoretical approaches developed in the literature may be seen as special cases of this general framework.

Keywords: Utilitarianism, Inequality, Inequity Aversion, Risk Aversion, Intertemporal Welfare, Discounting

JEL Classification: D60, D63, D30

Suggested Citation

Berger, Loic and Emmerling, Johannes, Welfare As Simple(X) Equity Equivalents (March 9, 2017). FEEM Working Paper No. 14.2017, Available at SSRN: https://ssrn.com/abstract=2947601 or http://dx.doi.org/10.2139/ssrn.2947601

Loic Berger

CNRS ( email )

France

IÉSEG School of Management, Lille Campus ( email )

3 Rue de la Digue
Lille, 59000
France

RFF-CMCC European Institute on Economics and the Environment ( email )

Johannes Emmerling (Contact Author)

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici - European Institute onEconomy and the Environment (EIEE) ( email )

Via Bergognone, 34
Milan
Italy

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