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Measuring Economic Welfare


  • McKenzie,George W.


Professor McKenzie proposes and formulates a method composed of operational procedures designed to facilitate the evaluation of economic projects and policies. This method is discussed fully, illustrated by simple examples, and compared with alternative procedures. An outline of a computer program that enables readers to undertake their own calculations is included. In order to present the approach clearly, the author provides an exposition of the fundamental ideas and the main alternative approaches to the problem. These rely on various forms of index numbers and consumer surplus. However, as is well known, such measures are not capable of correctly ordering the various alternatives under consideration, except under highly unrealist assumptions. In this book the author suggests the abandonment of this traditional approach based on the concept of 'willingness-to-pay' or the conpensating variation. Instead, the measure that Samuelson has called the 'money-metric' should become the cornerstone of applied welfare economics.

Suggested Citation

  • McKenzie,George W., 1983. "Measuring Economic Welfare," Cambridge Books, Cambridge University Press, number 9780521248624, March.
  • Handle: RePEc:cup:cbooks:9780521248624

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    References listed on IDEAS

    1. Coase, R H, 1976. "Adam Smith's Views of Man," Journal of Law and Economics, University of Chicago Press, vol. 19(3), pages 529-546, October.
    2. Conybeare, John A C & Murdoch, James C & Sandler, Todd, 1994. "Alternative Collective-Goods Models of Military Alliances: Theory and Empirics," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 525-542, October.
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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. Bullock, David S. & Salhofer, Klaus, 2003. "Judging agricultural policies: a survey," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 28(3), May.
    3. Loehman, Edna T., 1991. "Alternative Measures of Benefit for Nonmarket Goods Which are Substitutes or Complements for Market Goods," Working Papers 115913, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
    4. van de Walle, Dominique, 1995. "Public spending and the poor : what we know, what we need to know," Policy Research Working Paper Series 1476, The World Bank.
    5. Christopher Chambers & Takashi Hayashi, 2012. "Money-metric utilitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(4), pages 809-831, October.
    6. Cook, David & Davidsdottir, Brynhildur & Petursson, Jón Geir, 2015. "Accounting for the utilisation of geothermal energy resources within the genuine progress indicator—A methodological review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 211-220.
    7. Carlisle Ford Runge & Robert J. Myers, 1985. "Shifting Foundations of Agricultural Policy Analysis: Welfare Economics When Risk Markets Are Incomplete," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 1010-1016.
    8. Baccouche, Rafiq & Laisney, François, 1988. "Évaluation de six propositions de réforme de la TVA sur données microéconomiques," L'Actualité Economique, Société Canadienne de Science Economique, vol. 64(2), pages 178-208, juin.
    9. Claude Hillinger, 2001. "Money Metric, Consumer Surplus and Welfare Measurement," German Economic Review, Verein für Socialpolitik, vol. 2(2), pages 177-193, May.
    10. Graham-Tomasi, Theodore & Myers, Robert J., 1989. "On Supply Side Option Value," Staff Papers 13341, University of Minnesota, Department of Applied Economics.
    11. David S. Bullock & Klaus Salhofer & Jukka Kola, 1999. "The Normative Analysis of Agricultural Policy: A General Framework and Review," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 512-535.
    12. Morisugi, Hisa & Ohno, Eiji, 1995. "Proposal of a benefit incidence matrix for urban development projects," Regional Science and Urban Economics, Elsevier, vol. 25(4), pages 461-481, August.
    13. Clarke, Matthew & Islam, Sardar M. N., 2003. "Measuring social welfare: application of social choice theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 1-15, March.
    14. James E. Anderson & Will Martin, 1996. "The Welfare Analysis of Fiscal Policy: A Simple Unified Account," Boston College Working Papers in Economics 316., Boston College Department of Economics.

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