Welfare as Equity Equivalents

Loïc Berger and Johannes Emmerling

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Abstract: Equity (or, its counterpart, inequity) plays a fundamental role in the evaluation of social welfare in different dimensions. In this paper, we revisit the concept of inequity-in the sense of unequal distributions-across individuals, time, and states of the world using a unified framework that generalizes the standard expected discounted utilitarianism approach. We propose a general measure of welfare as equity equivalents and a corresponding inequity index. We show that allowing for different attitudes toward inequity across different dimensions covers a scope of possible inequity preferences with different interpretations. We then prove that the order of aggregation across the different dimensions matters for welfare evaluations. Finally, we show that many of the welfare-theoretical approaches recently developed in the literature can be interpreted as special cases of this general framework.

Keywords: Utilitarianism; Inequality; Inequity Aversion; Risk aversion; Intertemporal Welfare (search for similar items in EconPapers)
Date: 2020-09-01
New Economics Papers: this item is included in nep-mic and nep-upt
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Published in Journal of Economic Surveys, 2020, 34 (4), pp.727-752. ⟨10.1111/joes.12368⟩

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Journal Article: WELFARE AS EQUITY EQUIVALENTS (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02937705

DOI: 10.1111/joes.12368

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