A Model and Indicator of Aggregate Need Satisfaction for Capped Objectives and Weighting Schemes for Situations of Scarcity

Normative criteria for evaluations of economic and social outcomes are often formulated in terms of social welfare functions which are essentially and importantly non-satiable. However, there are good reasons to consider certain normative criteria and many policy objectives to be capped, i.e. bounded, and thus satiable provided sufficient resources are made available for their satisfaction. Inspired by the Foster–Greer–Thorbecke class of indicators, this paper uses an interdisciplinary approach to develop a model for assessing outcomes in terms of capped objectives based on an understanding of individual shortfalls from the objective, denoted needs. We present an indicator to measure need satisfaction in a population of individuals with heterogeneous needs and highlight an aggregation problem under scarcity. For such situations, we develop three ways in which the indicator can be weighted that reflect respectively concerns over the frequency, depth and severity of the need shortfalls and show that normative evaluations based on these weighting schemes can conflict, yielding mutually inconsistent outcome rankings. The indicator can be adapted to measure a wide variety of phenomena, e.g. health needs, education shortfalls, deprivation, etc., and it is suited for targeting exercises and other policy implementations. In particular, it allows for exogenous weighting schemes, i.e. weights that can incorporate non-shortfall characteristics relevant for the evaluation, e.g. age, gender, ethnicity, etc. The indicator thus enables new ways for researchers to promote and study satiable objectives in a wide variety of contexts relevant to economic and social policy, e.g. human development programs, poverty reduction, healthcare policies, etc.