A Generalized Social Welfare Function, its Decomposition and Application
It is easy to demonstrate that Sen's SWF satisfies Pareto criteria. This paper questions the philosophy of this concept and shows that it is possible to formulate a generalized SWF, which can be non-Paretian under special circumstances. This paper also demonstrates a method of decomposition of the proposed SWF by subgroups of population using a Gini decomposition method developed by Podder. The method is applied to investigate the trend of welfare in Australia at regional level using the Household Expenditure Survey data of 1983-84 to 1993-94. It is found that the states NSW, Victoria and Queensland, with the maximum total income share, had almost 70 percent of the share of total welfare. The elasticity of welfare with respect to mean income showed a prominent increasing trend for NSW. It is also observed that the relative share of welfare decreased for NSW, Victoria, South Australia, Queensland and Australian Capital Territory and increased for Tasmania and Northern Territory.
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- Shlomo Yitzhaki, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, Oxford University Press, vol. 93(2), pages 321-324.
- Amartya Sen, 1976. "Real National Income," Review of Economic Studies, Oxford University Press, vol. 43(1), pages 19-39.
- Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, vol. 4(1), pages 98-100, February.
- Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975, December.
- Dagum, Camilo, 1990. "On the relationship between income inequality measures and social welfare functions," Journal of Econometrics, Elsevier, vol. 43(1-2), pages 91-102.
- Sen, Amartya, 1974. "Informational bases of alternative welfare approaches : Aggregation and income distribution," Journal of Public Economics, Elsevier, vol. 3(4), pages 387-403, November.
- Sen, Amartya, 1979. "The Welfare Basis of Real Income Comparisons: A Survey," Journal of Economic Literature, American Economic Association, vol. 17(1), pages 1-45, March.
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