On a fallacy in the Kaldor–Hicks efficiency–equity analysis

David Ellerman ()

Constitutional Political Economy, 2014, vol. 25, issue 2, 125-136

Abstract: This paper shows that implicit assumptions about the numeraire good in the Kaldor–Hicks efficiency–equity analysis involve a “same-yardstick” fallacy (a fallacy pointed out by Paul Samuelson in another context). These results have negative implications for cost-benefit analysis, the wealth-maximization approach to law and economics, and other parts of applied welfare economics—as well as for the whole vision of economics based on the “production and distribution of social wealth”. Copyright Springer Science+Business Media New York 2014

Keywords: Kaldor–Hicks criterion; Wealth maximization; Efficiency; Equity; Law and economics; Cost-benefit analysis; D6; K (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:kap:copoec:v:25:y:2014:i:2:p:125-136

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DOI: 10.1007/s10602-014-9159-x

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