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Aggregating Local Preferences to Guide Marginal Policy Adjustments

Author

Listed:
  • Daniel J. Benjamin
  • Ori Heffetz
  • Miles S. Kimball
  • Nichole Szembrot

Abstract

We propose a social choice rule for aggregating preferences elicited from surveys into a marginal adjustment of policy from the status quo. The mechanism is: (i) symmetric in its treatment of survey respondents; (ii) ordinal, using only the orientation of respondents' indifference surfaces; (iii) local, using only preferences in the neighborhood of current policy; and (iv) what we call "first-order strategy-proof," making the gains from misreporting preferences second order. The mechanism could be applied to guide policy based on how policy affects responses to subjective well-being surveys.

Suggested Citation

  • Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Nichole Szembrot, 2013. "Aggregating Local Preferences to Guide Marginal Policy Adjustments," American Economic Review, American Economic Association, vol. 103(3), pages 605-610, May.
    • Handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:605-10
    Note: DOI: 10.1257/aer.103.3.605
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    References listed on IDEAS

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    1. Fleurbaey, Marc & Suzumura, Kotaro & Tadenuma, Koichi, 2005. "Arrovian aggregation in economic environments: how much should we know about indifference surfaces?," Journal of Economic Theory, Elsevier, vol. 124(1), pages 22-44, September.
    2. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2012. "What Do You Think Would Make You Happier? What Do You Think You Would Choose?," American Economic Review, American Economic Association, vol. 102(5), pages 2083-2110, August.
    3. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Nichole Szembrot, 2014. "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference," American Economic Review, American Economic Association, vol. 104(9), pages 2698-2735, September.
    4. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
    5. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2014. "Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices," American Economic Review, American Economic Association, vol. 104(11), pages 3498-3528, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Clemens Hetschko & Louisa von Reumont & Ronnie Schöb, 2019. "Embedding as a pitfall for survey‐based welfare indicators: evidence from an experiment," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 182(2), pages 517-539, February.
    2. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Nichole Szembrot, 2014. "Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference," American Economic Review, American Economic Association, vol. 104(9), pages 2698-2735, September.
    3. Hun Chung & John Duggan, 2018. "Directional equilibria," Journal of Theoretical Politics, , vol. 30(3), pages 272-305, July.
    4. Alem, Yonas & Colmer, Jonathan, 2015. "Consumption smoothing and the welfare cost of uncertainty," LSE Research Online Documents on Economics 63816, London School of Economics and Political Science, LSE Library.
    5. Alem, Yonas & Colmer, Jonathan, 2013. "Optimal Expectations and the Welfare Cost of Climate Variability," Working Papers in Economics 578, University of Gothenburg, Department of Economics.
    6. Yonas Alem & Jonathan Colmer, 2015. "Consumption smoothing and the welfare cost of uncertainty," GRI Working Papers 118b, Grantham Research Institute on Climate Change and the Environment.
    7. Yonas Alem & Jonathan Colmer, 2015. "Consumption Smoothing and the Welfare Cost of Uncertainty," CEP Discussion Papers dp1369, Centre for Economic Performance, LSE.
    8. Nicolaus Tideman & Florenz Plassmann, 2017. "Efficient collective decision-making, marginal cost pricing, and quadratic voting," Public Choice, Springer, vol. 172(1), pages 45-73, July.
    9. Daniel Benjamin & Ori Heffetz & Miles Kimball & Derek Lougee, 2017. "The relationship between the normalized gradient addition mechanism and quadratic voting," Public Choice, Springer, vol. 172(1), pages 233-263, July.
    10. repec:cep:stieop:59 is not listed on IDEAS
    11. Yonas Alem & Jonathan Colmer, 2015. "Consumption Smoothing and the Welfare Cost of Uncertainty," STICERD - Economic Organisation and Public Policy Discussion Papers Series 059, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    12. Yonas Alem & Jonathan Colmer, 2022. "Blame it on the rain: Rainfall variability, consumption smoothing, and subjective well‐being in rural Ethiopia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 905-920, May.

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    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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