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On the Foundations of Well-Being Economics and Policy

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  • Giuseppe Munda

    (Departament d'Economia i d'Història Econòmica, Universitat Autònoma de Barcelona)

Abstract

When one wishes to implement public policies, there is a previous need of comparing different actions and valuating and evaluating them to assess their social attractiveness. Recently the concept of well-being has been proposed as a multidimensional proxy for measuring societal prosperity and progress; a key research topic is then on how we can measure and evaluate this plurality of dimensions for policy decisions. This paper defends the thesis articulated in the following points: 1. Different metrics are linked to different objectives and values. To use only one measurement unit (on the grounds of the so-called commensurability principle) for incorporating a plurality of dimensions, objectives and values, implies reductionism necessarily. 2. Point 1) can be proven as a matter of formal logic by drawing on the work of Geach about moral philosophy. This theoretical demonstration is an original contribution of this article. Here the distinction between predicative and attributive adjectives is formalised and definitions are provided. Predicative adjectives are further distinguished into absolute and relative ones. The new concepts of set commensurability and rod commensurability are introduced too. 3. The existence of a plurality of social actors, with interest in the policy being assessed, causes that social decisions involve multiple types of values, of which economic efficiency is only one. Therefore it is misleading to make social decisions based only on that one value. 4. Weak comparability of values, which is grounded on incommensurability, is proved to be the main methodological foundation of policy evaluation in the framework of well-being economics. Incommensurability does not imply incomparability; on the contrary incommensurability is the only rational way to compare societal options under a plurality of policy objectives. 5. Weak comparability can be implemented by using multi-criteria evaluation, which is a formal framework for applied consequentialism under incommensurability. Social Multi-Criteria Evaluation, in particular, allows considering both technical and social incommensurabilities simultaneously.

Suggested Citation

  • Giuseppe Munda, 2013. "On the Foundations of Well-Being Economics and Policy," UHE Working papers 2013_01, Universitat Autònoma de Barcelona, Departament d'Economia i Història Econòmica, Unitat d'Història Econòmica.
  • Handle: RePEc:aub:uhewps:2013_01
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    References listed on IDEAS

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    1. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-484, July.
    2. Jean-Yves Duclos & David E. Sahn & Stephen D. Younger, 2006. "Robust Multidimensional Poverty Comparisons," Economic Journal, Royal Economic Society, vol. 116(514), pages 943-968, October.
    3. Arrow, Kenneth J. & Dasgupta, Partha & Goulder, Lawrence H. & Mumford, Kevin J. & Oleson, Kirsten, 2012. "Sustainability and the measurement of wealth," Environment and Development Economics, Cambridge University Press, vol. 17(03), pages 317-353, June.
    4. Dasgupta, Partha, 2001. "Valuing Objects and Evaluating Policies in Imperfect Economies," Economic Journal, Royal Economic Society, vol. 111(471), pages 1-29, May.
    5. Kenneth J. Arrow & Herve Raynaud, 1986. "Social Choice and Multicriterion Decision-Making," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511754, January.
    6. David Colander, 1994. "Vision, judgment, and disagreement among economists," Journal of Economic Methodology, Taylor & Francis Journals, vol. 1(1), pages 43-56.
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    More about this item

    Keywords

    Value Theory; Incommensurability; Public Policy; Sustainability; Cost-Benefit Analysis; Multiple Criteria Evaluation; Complexity Theory;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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