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Policy Evaluation, welfare weights and value judgements: a Reminder

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  • John Creedy

    (The University of Melbourne)

Abstract

This paper is concerned with the use of social welfare functions in evaluating changes. In particular, it considers suggestions that welfare weights to be used in comparing the gains and losses of different individuals (or other appropriate units of analysis), and a social time preference rate for use in cost benefit evaluation, can be estimated either from consumers' behaviour or from the judgements implicit in tax policy. It is suggested that results are highly sensitive to the context and model specification assumed. More importantly, the argument that an estimated elasticity of marginal utility or time preference rate should be used in policy evaluations fails to recognise that fundamental value judgements are involved. Various estimates may be of interest, but they cannot be used by economists to impose value judgements. The main contribution economists can make is to examine the implications of adopting a range of alternative value judgements.

Suggested Citation

  • John Creedy, 2007. "Policy Evaluation, welfare weights and value judgements: a Reminder," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 10(1), pages 1-15.
    • Handle: RePEc:ozl:journl:v:10:y:2007:i:1:p:1-15
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    References listed on IDEAS

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    8. Young, H. P., 1987. "Progressive taxation and the equal sacrifice principle," Journal of Public Economics, Elsevier, vol. 32(2), pages 203-214, March.
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    10. John Creedy, 1996. "Fiscal Policy and Social Welfare," Books, Edward Elgar Publishing, number 797.
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    Cited by:

    1. John Creedy, 2008. "A note on discounting and the social time preference rate," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 11(3), pages 249-255.
    2. John Creedy & Hemant Passi, 2018. "Public Sector Discount Rates: A Comparison of Alternative Approaches," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(1), pages 139-157, March.
    3. Mark A. Moore & Anthony E. Boardman & Aidan R. Vining, 2020. "Social Discount Rates for Seventeen Latin American Countries: Theory and Parameter Estimation," Public Finance Review, , vol. 48(1), pages 43-71, January.
    4. Arthur Grimes, 2010. "The Economics of Infrastructure Investment: Beyond Simple Cost Benefit Analysis," Working Papers 10_05, Motu Economic and Public Policy Research.
    5. Armando Barrientos & Stephan Dietrich & Franziska Gassmann & Daniele Malerba, 2022. "Prioritarian rates of return to antipoverty transfers," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(3), pages 550-563, April.

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    More about this item

    Keywords

    General Welfare; Allocative Efficiency; Cost-Benefit Analysis; Equity; Justice; Inequality; and Other Normative Criteria and Measurement;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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