Hicksian Surplus Measures of Individual Welfare Change When There is Price and Income Uncertainty

Charles Blackorby (), David Donaldson and John Weymark
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Charles Blackorby: University of Warwick

A chapter in Rational Choice and Social Welfare, 2008, pp 195-213 from Springer

Abstract: When there is no uncertainty, it is well known that the Hicksian compensating and equivalent variations are exact measures of individual welfare change. That is, the sign of either of these measures of Hicksian consumer’s surplus correctly identifies whether a change in prices and income makes an individual consumer better or worse off.1 It is also well known that Marshallian consumer’s surplus is not an exact measure of individual welfare change except under restrictive assumptions.2

Keywords: Utility Function; Marginal Utility; Equivalent Variation; Indirect Utility Function; Welfare Change (search for similar items in EconPapers)
Date: 2008
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Working Paper: Hicksian Surplus Measures of Individual Welfare Change When There is Price and Income Uncertainty (2006)
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DOI: 10.1007/978-3-540-79832-3_11

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