DP14783 Aggregating Welfare Gains

Author(s): Maya Eden
Publication Date: May 2020
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14783

I characterize the set of policy decision rules which, in addition to satisfying the standard Pareto condition and a weak anonymity requirement, utilize only information about the objective effects of a policy change and its associated profile of individual "welfare gains". I establish that, depending on the assumptions made about individual preferences, there is either no social decision rule that satisfies these requirements, or a unique one. I characterize the unique social decision rules under different common definitions of "welfare gains" and common assumptions about individual preferences.