Robust Multidimensional Welfare Comparisons: One Vector of Weights, One Vote
AbstractMany aspects of social welfare are intrinsically multidimensional. Composite indices at-tempting to reduce this complexity to a unique measure abound in many areas of economics and public policy. Comparisons based on such measures depend, sometimes critically, on how the different dimensions of performance are weighted. Thus, a policy maker may wish to take into account imprecision over composite index weights in a systematic manner. In this paper, such weight imprecision is parameterized via the e-contamination framework of Bayesian statistics. Subsequently, combining results from polyhedral geometry, social choice, and theoretical computer science, an analytical procedure is presented that yields a provably robust ranking of the relevant alternatives in the presence of weight imprecision. The main idea is to consider a vector of weights as a voter and a continuum of weights as an electorate. The procedure is illustrated on recent versions of the Rule of Law and Human Development indices.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2013.40.
Date of creation: May 2013
Date of revision:
Multidimensional Welfare; Composite Index; e-Contamination; Polyhedral Geometry; Social Choice; Approximation Algorithms;
Find related papers by JEL classification:
- C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
- D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-16 (All new papers)
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