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Aggregate Consumer Behavior and the Measurement of Social Welfare

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  • Jorgenson, Dale W

Abstract

This paper describes a new approach to normative economics, combining the theory of social choice with econometric modeling of aggregate consumer behavior. The author first derives a system of aggregate demand functions by exact aggregation over individual demand functions. He then constructs measures of individual welfare from systems of individual demand functions. Finally, the author incorporates these measures into a social welfare function, introducing ethical assumptions based on horizontal and vertical equity. To illustrate the application of this approach, he considers the U.S. standard of living and its cost over the period 1947-85. Copyright 1990 by The Econometric Society.

Suggested Citation

  • Jorgenson, Dale W, 1990. "Aggregate Consumer Behavior and the Measurement of Social Welfare," Econometrica, Econometric Society, vol. 58(5), pages 1007-1040, September.
  • Handle: RePEc:ecm:emetrp:v:58:y:1990:i:5:p:1007-40
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    Cited by:

    1. Claude Hillinger, 2002. "A General Theory of Price and Quantity Aggregation and Welfare Measurement," CESifo Working Paper Series 818, CESifo Group Munich.
    2. Kjell Brekke & Hilde Lurå & Karine Nyborg, 1996. "Allowing disagreement in evaluations of social welfare," Journal of Economics, Springer, vol. 63(3), pages 303-324, October.
    3. repec:bla:revinw:v:63:y:2017:i::p:s460-s477 is not listed on IDEAS
    4. Vincenzo Atella & Jay Coggins & Federico Perali, 2005. "Aversion to inequality in Italy and its determinants," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(2), pages 117-144, January.
    5. Gould, Brian W., 1996. "Factors Affecting U.S. Demand For Reduced-Fat Fluid Milk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-14, July.
    6. Jay S. Coggins & Federico Perali, 2000. "Voting For Equity: Estimating Society'S Preferences Toward Inequality," CHILD Working Papers wp04_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    7. Aliakbar KHOSRAVINEJAD, "undated". "Welfare Effects of Food Desubsidization For Iranian Urban Households (The Index Number and Demand System Approach)," EcoMod2008 23800063, EcoMod.
    8. Adam Szulc, 1996. "Economic Transition and Poverty: The Case of the Vysehrad Group Countries," LIS Working papers 138, LIS Cross-National Data Center in Luxembourg.
    9. Migdalas, A. & Baourakis, G. & Kalogeras, N. & Meriem, H. B., 2004. "Sector modeling for the prediction and evaluation of Cretan olive oil," European Journal of Operational Research, Elsevier, vol. 152(2), pages 454-464, January.
    10. Marc Fleurbaey & Guillaume Gaulier, 2009. "International Comparisons of Living Standards by Equivalent Incomes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(3), pages 597-624, September.
    11. Laisney, François, 1991. "Mikroökonometrische Untersuchung von Aggregationsproblemen: Eine partielle Übersicht," ZEW Discussion Papers 91-03, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    12. Jeffrey T. LaFrance & Rulon D. Pope, 2008. "Homogeneity and Supply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 606-612.
    13. Marshall Reinsdorf & Jack E. Triplett, 2009. "A Review of Reviews: Ninety Years of Professional Thinking About the Consumer Price Index," NBER Chapters,in: Price Index Concepts and Measurement, pages 17-83 National Bureau of Economic Research, Inc.
    14. Cranfield, J. A. L. & Preckel, Paul V. & Eales, James S. & Hertel, Thomas W., 2004. "Simultaneous estimation of an implicit directly additive demand system and the distribution of expenditure--an application of maximum entropy," Economic Modelling, Elsevier, vol. 21(2), pages 361-385, March.
    15. Ada Ferrer-i-Carbonell, 2002. "Subjective Questions to Measure Welfare and Well-being," Tinbergen Institute Discussion Papers 02-020/3, Tinbergen Institute.
    16. Johannes Schwarze, 1994. "Subjective Measures of Economic Well-Being and the Influence of Income Uncertainty," Discussion Papers of DIW Berlin 94, DIW Berlin, German Institute for Economic Research.
    17. Claude Hillinger, 2001. "Money Metric, Consumer Surplus and Welfare Measurement," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 177-193, May.
    18. Hillinger, Claude, 2008. "Measuring Real Value and Inflation," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-26.
    19. Coggins, Jay S. & Perali, C. Federico, 1993. "Voting for Equity: Estimating Society's Preferences Toward Inequality," Staff Papers 200567, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.

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