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Welfare - Vol. 2: Measuring Social Welfare


  • Dale W. Jorgenson

    () (Harvard University)


This volume presents an approach to the evaluation of economic policies through the econometric modeling of aggregate consumer behavior. While the preferences of individual consumers are revealed by their market choices, these preferences can be recovered only by econometric methods, not through the index numbers used in the official statistics. The richer and more robust methodology presented in this volume provides a fruitful point of departure for future policy evaluations. The econometric approach replaces ordinal measures of individual welfare that cannot be compared among individuals with cardinal measures that can. These are combined into an indicator of social welfare that reflects principles of horizontal and vertical equity. This approach unifies the measurement of poverty, inequality, and cost and standard of living. It extends the scope of normative economics to a broader range of issues in the evaluation of economic and social policies.

Suggested Citation

  • Dale W. Jorgenson, 1997. "Welfare - Vol. 2: Measuring Social Welfare," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262100630, January.
  • Handle: RePEc:mtp:titles:0262100630

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    References listed on IDEAS

    1. Tornell, Aaron & Velasco, Andres, 2000. "Fixed versus flexible exchange rates: Which provides more fiscal discipline?," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 399-436, April.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fixing for Your Life," NBER Working Papers 8006, National Bureau of Economic Research, Inc.
    3. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    4. Ricardo Hausmann & Michael Gavin & Carmen Pagés & Ernesto H. Stein, 1999. "Financial Turmoil and the Choice of Exchange Rate Regime," IDB Publications (Working Papers) 1108, Inter-American Development Bank.
    5. Kenen, Peter B., 2000. "Currency areas, policy domains, and the institutionalization of fixed exchange rates," LSE Research Online Documents on Economics 20170, London School of Economics and Political Science, LSE Library.
    6. Giancarlo Corsetti & Paolo Pesenti, 2001. "Welfare and Macroeconomic Interdependence," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 421-445.
    7. Obstfeld, Maurice & Rogoff, Kenneth, 2000. "New directions for stochastic open economy models," Journal of International Economics, Elsevier, vol. 50(1), pages 117-153, February.
    8. Miguel A Savastano & Paul R Masson & Sunil Sharma, 1997. "The Scope for Inflation Targeting in Developing Countries," IMF Working Papers 97/130, International Monetary Fund.
    9. Amartya Lahiri & Carlos A. Végh, 2002. "Living with the Fear of Floating: An Optimal Policy Perspective," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 663-704 National Bureau of Economic Research, Inc.
    10. Klein, Michael W. & Marion, Nancy P., 1997. "Explaining the duration of exchange-rate pegs," Journal of Development Economics, Elsevier, vol. 54(2), pages 387-404, December.
    11. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
    12. Fischer, Stanley, 1993. "The role of macroeconomic factors in growth," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 485-512, December.
    13. Svensson, Lars E. O., 2000. "Open-economy inflation targeting," Journal of International Economics, Elsevier, vol. 50(1), pages 155-183, February.
    14. David Romer, 1993. "Openness and Inflation: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 869-903.
    15. Richard Clarida & Jordi Gali & Mark Gertler, 2001. "Optimal Monetary Policy in Open versus Closed Economies: An Integrated Approach," American Economic Review, American Economic Association, vol. 91(2), pages 248-252, May.
    16. Sebastian Edwards & Miguel A. Savastano, 1999. "Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know?," NBER Working Papers 7228, National Bureau of Economic Research, Inc.
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    Cited by:

    1. 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.
    2. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    3. Y. Qiang, 1999. "The Numerical Implementation of WAM," Economics Discussion / Working Papers 99-07, The University of Western Australia, Department of Economics.
    4. Seung-Rae Kim, 2002. "Environmental Taxes and Economic Welfare: The Welfare Cost of Gasoline Taxation in the U.S. 1959-1999," Public Economics 0201003, EconWPA, revised 11 May 2004.

    More about this item


    welfare; market choices; econometric methods;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General


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