Welfare Equivalent NNP and Habit Formation
AbstractThis note concerns the importance of habit formation for social accounting. With internal habit formation, earlier procedures for welfare measurement in the first best apply with minor modifications. This result strengthens the idea behind using the comprehensive net national product as a welfare indicator. If, on the other hand, part of the habit formation is exogenous to each consumer, the exact welfare measure will also reflect the associated external effect.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 680.
Length: 7 pages
Date of creation: 10 Apr 2006
Date of revision:
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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
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More information through EDIRC
Social accounting; habit formation; welfare;
Find related papers by JEL classification:
- D10 - Microeconomics - - Household Behavior - - - General
- D60 - Microeconomics - - Welfare Economics - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
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