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Price Index Dispersion And Utilitarian Social Evaluation

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  • Christophe Muller

    () (Universidad de Alicante)

Abstract

The living standard indicator in utilitarian social evaluation functions (USEF) is the ratio of a nominal living standard and a price index. We show that under weak association of price indices and nominal living standards and usual concavity conditions on utility functions, utilitarian social welfare increases with price index dispersion when the aggregate price level is superior to the arithmetic mean of price indices, and diminishes when it is inferior to the harmonic mean.

Suggested Citation

  • Christophe Muller, 2005. "Price Index Dispersion And Utilitarian Social Evaluation," Working Papers. Serie AD 2005-09, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2005-09
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Personal income distribution; economic welfare; price dispersion;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D6 - Microeconomics - - Welfare Economics

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