2 - Social welfare orderings
Published online by Cambridge University Press: 05 January 2013
Summary
Overview
The egalitarian and classical utilitarian programs, in spite of all their differences, have one common functional feature. Both utilize a collective utility function (CUF) aggregating individual utilities into a single utility index representing the social welfare. Within the feasible utility set, they then select the socially optimum utility vector by maximizing the CUF. This function is the sum of individual utilities for classical utilitarianism and their minimum for egalitarianism (see Chapter 1).
The welfarist axioms considered in this chapter develop this anthropomorphic idea. Society's welfare is described by a collective utility index computed mechanically from individual utilities. Thus, collective choice follows the same rationale as individual choice: “Il faut que les méthodes d'une assemblée délibérante se rapprochent autant qu'il est possible de celles des individus qui la composent” (Condorcet [1785]; the methods of a deliberating assembly must be as close as possible to those of its individual members). In particular, any two vectors of individual utilities can be compared, and those comparisons are transitive.
The primary economic application of CUFs is to the measurement of inequality. Estimating the welfare consequences of the distribution of incomes (or of that of any variable related to individual welfare) is an important task of public economics. Doing this systematically means that we must be able to compare any two income distributions and tell which one yields the highest social welfare. In other words, we must choose a social welfare ordering (SWO). This choice will be guided by additional ethical postulates. The consequences of those postulates on the mathematical form of the SWO is the subject of this chapter.
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- Axioms of Cooperative Decision Making , pp. 30 - 60Publisher: Cambridge University PressPrint publication year: 1988