A Generalized Social Welfare Function, its Decomposition and Application

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A Generalized Social Welfare Function, its Decomposition and Application

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Pundarik Mukhopadhaya () (National University of Singapore)

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Pundarik Mukhopadhaya

Abstract

It is easy to demonstrate that Sen's SWF satisfies Pareto criteria. This paper questions the philosophy of this concept and shows that it is possible to formulate a generalized SWF, which can be non-Paretian under special circumstances. This paper also demonstrates a method of decomposition of the proposed SWF by subgroups of population using a Gini decomposition method developed by Podder. The method is applied to investigate the trend of welfare in Australia at regional level using the Household Expenditure Survey data of 1983-84 to 1993-94. It is found that the states NSW, Victoria and Queensland, with the maximum total income share, had almost 70 percent of the share of total welfare. The elasticity of welfare with respect to mean income showed a prominent increasing trend for NSW. It is also observed that the relative share of welfare decreased for NSW, Victoria, South Australia, Queensland and Australian Capital Territory and increased for Tasmania and Northern Territory.

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Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0119.

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Length: 16 pages
Date of creation: 2001
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Handle: RePEc:nus:nusewp:wp0119

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Find related papers by JEL classification:
D39 - Microeconomics - - Distribution - - - Other
D69 - Microeconomics - - Welfare Economics - - - Other

This paper has been announced in the following NEP Reports:

NEP-MIC-2001-12-19 (Microeconomics)

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Sen, Amartya K, 1976. "Real National Income," Review of Economic Studies, Blackwell Publishing, vol. 43(1), pages 19-39, February. [Downloadable!] (restricted)
Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 321-24, May. [Downloadable!] (restricted)
Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, vol. 4(1), pages 98-100, February. [Downloadable!] (restricted)
Sen, Amartya, 1979. "The Welfare Basis of Real Income Comparisons: A Survey," Journal of Economic Literature, American Economic Association, vol. 17(1), pages 1-45, March. [Downloadable!] (restricted)

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