Social welfare and the unrepresentative representative consumer

Michael Jerison

Journal of Public Economic Theory, 2023, vol. 25, issue 1, 5-28

Abstract: If, for all prices, income distribution is optimal for a planner with a social welfare function, then aggregate demand is the same as that of a single “representative consumer” whose preferences over aggregate consumption are the same as the planner's. This paper shows that the converse is false. Aggregate demand may be the demand function of a representative consumer although the income distribution is not optimal for any social welfare function. The representative consumer may be Pareto inconsistent, preferring situation A to B when all the actual consumers prefer B to A. We give conditions under which existence of a representative consumer implies that the income distribution satisfies first order conditions for optimality. Satisfying the first order optimality conditions for an additively separable social welfare function is essentially equivalent to aggregate demand for every pair of consumers having a symmetric Slutsky matrix.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jpet.12629

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:25:y:2023:i:1:p:5-28

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().