Charles Blackorby

Social criteria for evaluating population change.

Abstract Many applications of economic analysis require social evaluations of alternatives involving different numbers of people. In this paper we use the tools of social-choice theory to provide an axiomatic formulation of this problem. It yields a class of social criteria called ‘critical-level generalized utilitarianism’. This class and its implications are compared with other criteria and are found to yield intuitively appealing results.

On testing separability restrictions with flexible functional forms

Abstract In this paper, we examine the implications of imposing separability on the translog and three other flexible forms. Our results imply that the Berndt-Christensen ‘nonlinear’ test for weak separability tests not only for weak separability, but also imposes a restrictive structure on the macro and micro functions for all currently known ‘flexible’ functional forms. For example, testing for weak separability using the translog as an exact form is in fact equivalent to testing for a hybrid of strong (additive) separability and homothetic weak separability with Cobb-Douglas aggregator functions. Our results show that these ‘flexible’ functional forms are ‘separability-inflexible’. That is, they are not capable of providing a second-order approximation to an arbitrary weakly separable function in any neighbourhood of a given point.

Adult-equivalence scales and the economic implementation of interpersonal comparisons of well-being*

Equivalence Scale Exactness (ESE) or Independence of Base (IB), a condition on household preferences and interpersonal comparisons, makes adult-equivalence scales independent of utility levels. ESE is characterized by Income-Ratio Comparability (IRC) which assumes that utility equality is preserved by income scaling. If ESE/IRC is a maintained hypothesis, equivalence scales can be estimated from behaviour alone if preferences are not piglog. This condition is not met by a family of translog expenditure functions or by the Almost Ideal Demand System. A translog expenditure function can be used for the ‘reference’ household, however, together with an independent specification of the equivalence scale.

Utilitarianism and the theory of justice

This chapter provides a survey of utilitarian theories of justice. We review and discuss axiomatizations of utilitarian and generalized-utilitarian social-evaluation functionals in a welfarist framework. Section 2 introduces, along with some basic definitions, social-evaluation functionals. Furthermore, we discuss several information-invariance assumptions. In Section 3, we introduce the welfarism axioms unrestricted domain, binary independence of irrelevant alternatives and Pareto indifference, and use them to characterize welfarist social evaluation. These axioms imply that there exists a single ordering of utility vectors that can be used to rank all alternatives for any profile of individual utility functions. We call such an ordering a social-evaluation ordering, and we introduce several examples of classes of such orderings. In addition, we formulate some further basic axioms. Section 4 provides characterizations of generalized-utilitarian social-evaluation orderings, both in a static and in an intertemporal framework. Section 5 deals with the special case of utilitarianism. We review some known axiomatizations and, in addition, prove a new characterization result that uses an axiom we call incremental equity. In Section 6, we analyze generalizations of utilitarian principles to variable-population environments. We extend the welfarism theorem to a variable-population framework and provide a characterization of critical-level generalized utilitarianism. Section 7 provides an extension to situations in which the alternatives resulting from choices among feasible actions are not known with certainty. In this setting, we discuss characterization as well as impossibility results. Section 8 concludes.

A review article: The case against the use of the sum of compensating variations in cost-benefit analysis

This paper presents a case against the use of the sum of compensating variations as a cost-benefit test. The authors argue that (1) the ethical judgments implied by the test are not defensible; (2) positive sums of compensating variations occur without potential Pareto improvements, resulting in social preference reversals without simultaneous Scitovsky reversals; (3) when lump-sum transfers are feasible, a positive sum of compensating variations is necessary, but not sufficient, for a potential Pareto improvement; and (4) in order to eliminate preference reversals and intransitivities, all households must have almost identical quasi-homothetic preferences--a condition that is not satisfied in real economies.

Money metric utility: A harmless normalization?

Abstract Money metric utility is a particular normalization of a households utility function, and represents its preferences exactly. The money metric representation is normally not concave; however, this is a desirable property if it is to be used in applied welfare analysis. We show that money metrics are concave for all reference prices if and only if preferences are homothetic and concave on a consumption set bounded away from the origin if and only if preferences are quasihomothetic.

Ethical Social Index Numbers and the Measurement of Effective Tax-Benefit Progressivity

In this paper we propose a general method for constructing measures (both relative and absolute) of effective tax/benefit progressivity from social-welfare functions. Relative measures compare the after-tax (or benefit) distribution of income with the distribution that would result if the burden were imposed proportionally. Absolute measures use the equal taxation of individuals as a benchmark. These indices are related to relative and absolute indices of inequality. Our relative indices are generalizations of the Gini-index-based Musgrave-Thin measure of effective progressivity. We compare our general indices to the proposals of Kakwani, Khetan and Poddar, and Suits.

Welfare ratios and distributionally sensitive cost-benefit analysis

Abstract We analyze a method for distributionally sensitive cost-benefit analysis that uses household welfare ratios (the ratio of household income to the appropriate poverty line) as an index of each household members well-being. Advantages include: (i) welfare ratios are easy to compute and interpret, and they take account of economies of scale in consumption; (ii) the method is price-sensitive, and household-specific prices may be used, allowing for rationing, public goods and work effort; (iii) welfare ratios are linear in income and therefore concave (not a general property of money metrics), ensuring that their quasi-concave aggregation will be consistent with normal ethical judgements; (iv) welfare ratios economize on interpersonal comparisons of utility, needing only the comparisons provided by the poverty lines. the main disadvantage of the method is that welfare ratios are not, in general, exact indices of well-being.

Aggregation of Efficiency Indices

Measurement of technical efficiency is carried out at many levels of aggregation—at the individual branch, plant, division, or district level; at the company- or organization-wide level; at the industry or sectoral level; or at the economy-wide level. In this paper, we examine the conditions under which these indexes constructed at various levels of aggregation can be consistent with one another—that is, the extent to which efficiency indexes can be consistently aggregated. Unfortunately, our results are discouraging, indicating that very strong restrictions on the technology and/or the efficiency index itself are required to enable consistent aggregation (or disaggregation).

Critical-Level Utilitarianism and the Population-Ethics Dilemma

Advances in technology have made it possible for us to take actions that affect the numbers and identities of humans and other animals that will live in the future. Effective and inexpensive birth control, child allowances, genetic screening, safe abortion, in vitro fertilization, the education of young women, sterilization programs, environmental degradation and war all have these effects.