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Utilitarian Social Choice and Distributional Welfare Analysis

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  • Federico Echenique
  • Quitz'e Valenzuela-Stookey

Abstract

Harsanyi (1955) showed that the only way to aggregate individual preferences into a social preference which satisfies certain desirable properties is ``utilitarianism'', whereby the social utility function is a weighted average of individual utilities. This representation forms the basis for welfare analysis in most applied work. We argue, however, that welfare analysis based on Harsanyi's version of utilitarianism may overlook important distributional considerations. We therefore introduce a notion of utilitarianism for discrete-choice settings which applies to \textit{social choice functions}, which describe the actions of society, rather than social welfare functions which describe society's preferences (as in Harsanyi). We characterize a representation of utilitarian social choice, and show that it provides a foundation for a family of \textit{distributional welfare measures} based on quantiles of the distribution of individual welfare effects, rather than averages.

Suggested Citation

  • Federico Echenique & Quitz'e Valenzuela-Stookey, 2024. "Utilitarian Social Choice and Distributional Welfare Analysis," Papers 2411.01315, arXiv.org, revised Jul 2026.
    • Handle: RePEc:arx:papers:2411.01315
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    References listed on IDEAS

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    1. Peter A. Diamond, 1967. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment," Journal of Political Economy, University of Chicago Press, vol. 75(5), pages 765-765.
    2. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    3. Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2006. "The marginal cost of public funds: Hours of work versus labor force participation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1955-1973, November.
    4. Charles F. Manski & Aleksey Tetenov, 2014. "The Quantile Performance of Statistical Treatment Rules Using Hypothesis Tests to Allocate a Population to Two Treatments," CeMMAP working papers 44/14, Institute for Fiscal Studies.
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    Cited by:

    1. Costas Lambros & Emerson Melo, 2025. "Welfare at Risk: Distributional impact of policy interventions," Papers 2512.20918, arXiv.org.

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