Yew-Kwang Ng

From Preference to Happiness: Towards a More Complete Welfare Economics

Welfare economics is incomplete as it analyzes preferences without going on to analyze welfare (or happiness) which is the ultimate objective. Preference and welfare may differ due to imperfect knowledge, imperfect rationality, and/or a concern for the welfare of others (non-affective altruism). Imperfection in knowledge and rationality has a biological basis and the resulting accumulation instinct amplifies with advertising-fostered consumerism to result in a systematic materialistic bias. Such a bias, in combination with relative-income effects, environmental disruption effects, and over-estimation of the excess burden of taxation, results in the over-spending on private consumption and under-provision of public goods, and may make economic growth welfare-reducing. This is so despite the fact that growth finances the provision of public goods and disruption abatement and even if the tax rate and abatement ratio are optimized. To avoid welfare-reducing growth, disruption has to be taxed/controlled directly at low costs. Recent evidence on happiness and quality of life also tends to support the conclusions.

Happiness surveys: Some comparability issues and an exploratory survey based on just perceivable increments

Most questionnaires to obtain reports of happiness are primitive with the results obtained of low (interpersonal) comparability. This paper argues that happiness is intrinsically cardinally measurable and comparable though with many difficulties. Moreover, a sophisticated questionnaire was developed and used to obtain more accurate and interpersonally comparable reports of happiness based on the concept of just perceivable increments of pleasure/pain. Comparisons with the traditional questionnaire are also made (by the respondents) to show the superiority of the sophisticated questionnaire.

Welfare economics : introduction and development of basic concepts

Yew-Kwang Ng looks to make welfare economics more complete by discussing the recent inframarginal analysis of division of labour and by pushing welfare economics from the level of preference to that of happiness, making a reformulation of the foundation of public policy necessary. A theory of the third best is provided, with extension to the equality/efficiency issue. The remarkable conclusion of treating a dollar as a dollar provides a powerful simplification of public policy formulation in general and in cost-benefit analysis in particular.

Relative income, aspiration, environmental quality, individual and political myopia: Why may the rat-race for material growth be welfare-reducing?

Abstract This paper pulls together several strands of literature on issues importantto social welfare: the environmental impact of production and consumption, the importance of relative-income effects, aspiration and frustration, and the tendency of individuals and politicians to be myopic in intertemporal choices. These factors are compressed into a simple model from which some significant conclusions with significant real-world policy implications are deduced. Economic growth, which appears very important at the individual or even national levels, may reduce social welfare unless it is accompanied by increased environmental protection and/or other welfare-improving measures. Some analyses towards the quantification of the responses of welfare to absolute income, relative income, and aspiration satisfaction are also provided. These responses (in proportionate or elasticity terms) are all smaller at higher levels of the income scale.

Towards welfare biology: Evolutionary economics of animal consciousness and suffering

Welfare biology is the study of living things and their environment with respect to their welfare (defined as net happiness, or enjoyment minus suffering). Despite difficulties of ascertaining and measuring welfare and relevancy to normative issues, welfare biology is a positive science. Evolutionary economics and population dynamics are used to help answer basic questions in welfare biology: Which species are affective sentients capable of welfare? Do they enjoy positive or negative welfare? Can their welfare be dramatically increased? Under plausible axioms, all conscious species are plastic and all plastic species are conscious (and, with a stronger axiom, capable of welfare). More complex niches favour the evolution of more rational species. Evolutionary economics also supports the common-sense view that individual sentients failing to survive to mate suffer negative welfare. A kind of God-made (or evolution-created) fairness between species is also unexpectedly found. The contrast between growth maximization (as may be favoured by natural selection), average welfare, and total welfare maximization is discussed. It is shown that welfare could be increased without even sacrificing numbers (at equilibrium). Since the long-term reduction in animal suffering depends on scientific advances, strict restrictions on animal experimentation may be counter-productive to animal welfare.

Theory of the firm and structure of residual rights

AbstractThe following sections are included:IntroductionA Model with Intermediate GoodsConfiguration and Corner Solution versus Market Structure and Corner EquilibriumStructure of Residual Rights, Economies of Specialization, Economies of Division of Labor, and Economies of the FirmImplications and ConclusionsAppendix: Proof of Proposition 1References

Increasing Returns and Economic Analysis

Acknowledgements - Preface - Introduction - PART 1: SPECIALIZATION, ORGANIZATION AND GROWTH: NEW CLASSICAL ECONOMICS - Specialization and Division of Labour: a Survey X.Yang & S.Ng - Comments J.M.Buchanan - Comments J.Borland - Specialisation and the Emergence and the Value of Money W.Cheng - Productivity, Investment in Infrastructure and Population Size: Formalizing the Theory of Ester Boserup C.Y.C.Chu & Y-C.Tsai - The Inframarginal Analysis of Demand and Supply and the Relationship between a Minimum Level of Consumption and the Division of Labour M.Lio - Economies of Specialization and Trade S.Ng - Centralized Hierarchy within a Firm and Decentralized Hierarchy in the Market H.Shi & X.Yang - An Analytical Framework of Consumer-producers, Economies of Specialization and Transaction Costs M.Wen - An Extended Ethier Model with the Tradeoff between Economies of Scale and Transaction Costs K-y.Wong & X.Yang - Policy Analysis in a Dynamic Model with Endogenous Specialization J.Zhang PART 2: ECONOMIES OF SCALE AND MONOPOLISTIC COMPETITION - Increasing Returns, Constant Returns and Micro-Macro Economics R.Marris - Non-neutrality of Money under Non-perfect Competition: Why do Economists fail to see the Possibility? Y-K.Ng - Comments R.Marris - A Dynamic Model of Monopolistic Competition with Trade Externalities and Fiscal Policy K.N.Cheung - Comments C-S.Hwang - Industrialisation Policy and the Big Push J.Gans - Comments P.A.Trostel - Economies of Scale and Imperfect Competition in an Applied General Equilibrium Model of the Australian Economy K.A-Silva & M.Horridge - Comments P.B.Dixon - Variety, Spillovers and Market Structure in a Model of Endogenous Technological Change P.F.Peretto - Pursuit of Relative Conspicuous Consumption in Monopolistic Competition J.Wang & Y-K.Ng - Economic Fluctuations and Non-neutrality of Money based upon Imperfect Competition X.Yin - PART 3: INFORMATION, TRADE, AND RESOURCES - Innovation and Increasing Returns to Scale K.J.Arrow - Variable Returns to Scale and Factor Price Equalization M.Kemp, M.Okawa & M.Tawada - The Stolper-Samuelson Theorem in Models with Economies of Scale P.J.Lloyd & A.G.Schweinberger - Comments P.M.Sgro - Variable Returns to Scale, Resources and Population J.Pitchford - Index

Tourism, economic welfare and efficient pricing

A theoretical framework based on economics is provided for assessing tourisms costs and benefits. Suppose that resources utilized by tourists are owned by residents and, as marketed goods or services, are priced efficiently. Then increased tourism promotes net average (i.e., Pareto) economic gains for residents even in the face of such things as increased environmental costs and increased charges. Therefore, under these circumstances, there is no case for entry taxes or qualitative restrictions on tourism to deal with environmental issues. However, such taxes can be justified on rent-seeking grounds that are discussed in this paper.

Welfarism and Utilitarianism: A Rehabilitation

Utilitarianism seems to be going out of fashion, amidst increasing concerns for issues of freedom, equality, and justice. At least, anti-utilitarian and non-utilitarian moral philosophers have been very active. This paper is a very modest attempt to defend utilitarianism in particular and welfarism (i.e., general utilitarianism or utilitarianism without the sum-ranking aspect) in general. Section I provides an axiomatic defence of welfarism and utilitarianism. Section II discusses the divergences between individual preferences and individual welfares and argues in favour of welfare utilitarianism. Section III criticizes some non-utilitarian principles, including knowledge as intrinsically good, rights-based ethics, and Rawlss second principle. Section IV argues that most objections to welfarism are probably based on the confusion of non-ultimate considerations with basic values. This is discussed with reference to some recent philosophical writings which abound with such confusion. Section V argues that the acceptance of utilitarianism may be facilitated by the distinction between ideal morality and self-interest which also resolves the dilemma of average versus total utility maximization in optimal population theory.

Happiness Studies: Ways to Improve Comparability and Some Public Policy Implications*

Recent happiness studies by psychologists, sociologists and economists have produced many interesting results. These have important implications, including the need to focus less on purely objective (including economic) variables and more on subjective well-being. In particular, the focus on GDP should be supplemented (if not replaced) by more acceptable national success indicators such as the environmentally responsible happy nation index. Welfare economics and cost-benefit analysis that are currently based on economic factors (which are in turn based on preferences) should be revised to be based on happiness or welfare. Public spending on areas important for welfare should be preferred over private consumption that is largely no longer important for long-term welfare at the social level. Public policy should put more emphasis (than suggested by existing economic analysis) on factors more important for happiness than economic production and consumption, including employment, environmental quality, equality, health and safety. Above all, scientific advance in general and in brain stimulation and genetic engineering in particular may offer the real breakthroughs against the biological or psychological limitations on happiness. Some simple ways to improve the accuracy and comparability (including interpersonal) of happiness measurement are suggested: pinning down the level of neutrality, recognising the possible nonlinear scale used in self-reports, and using the just perceivable increment of pleasure as the interpersonally comparable unit. Copyright