Welfare and efficiency in public economics : [papers presented at a Seminar in Public Economics, Bad Neresheim 1986

Hans-Werner Sinn, Munich, West Germany This book contains 15 papers presented at a conference in Neresheim, West Ger­ many, in June 1986. The articles were selected by anonymous referees and most of them have undergone substantial revisions since their presentation. The common topic is measurement of welfare, both from efficiency and from equity perspectives. For many economists, welfare is a diffuse, arbitrary and am­ biguous concept. The papers collected in this book show that this view is not justified. Though not beyond all doubt, welfare theory today is crisp and clear, offering fairly straightforward measuring concepts. It even comes up with numbers that measure society's advantage or disadvantage from specific policy options in monetary units. Politicians get something they can intuitively understand and argue with, and they do not have to be afraid that all this is metaphysics or the result of the scientist's personal value judgements. Some economists, whom I would classify as belonging to the "everything is optimal" school, would claim that providing politicians with numerical welfare measures is superfluous or even dangerous. The world is as it is, and any attempt to give policy advice can only make things worse. I do not share this view. There are good policies and there are bad ones, but it may not be easy to distinguish between them. There is a role for consulting politicians, Dr. This book contains 15 selected and revised papers presented at a conference in Neresheim, West Germany, in June 1986. Prof. H.W. Sinn writes in his introduction to the book: "The common topic is measurement of welfare, both from efficiency and from equity perspectives. For many economists, welfare is a diffuse, arbitrary and ambiguous concept. The papers collected in this book show that this view is not justified. Though not beyond all doubt, welfare theory today is crisp and clear, offering fairly straightforward measuring concepts. It even comes up with numbers that measure society's advantage or disadvantage from specific policy options in monetary units. Politicians get something they can intuitively understand and argue with, and they do not have to be afraid that all this is metaphysics or the result of the scientist's personal value judgements. Some economists, whom I would classify as belonging to the "everything is optimal" school, would claim that providing politicians with numerical welfare measures is superfluous or even dangerous. The world is as it is, and any attempt to give policy advice can only make things worse. I do not share this view. There are good policies and there are bad ones, but it may not be easy to distinguish between them. There is a role for consulting politicians, Dr. Pangloss, or do you go shopping without thinking because you believe whatever you are going to buy is what you wanted anyway? Certainly, everyone knows that political decision processes are not all that rational and that there is a lot of slack in the public sector. This does not imply, however, that no attempt should be made to bring a bit more rationality and objectivity into public policy debates. Measurement of welfare helps to do that." Front Matter....Pages i-xvi Applied Welfare Economics and Frisch’s Conjecture....Pages 1-20 A Reconsideration of Debreu’s “Coefficient of Resource Utilization”....Pages 21-48 Measuring Welfare Changes in Quantity Constrained Regimes....Pages 49-70 Poverty Measurement: A Survey....Pages 71-147 Poverty Measures, Inequality and Decomposability....Pages 149-166 An Introduction to Applied General Equilibrium Tax Modelling....Pages 167-203 Incidence Effects of Changing the German Income Tax Rate Schedule....Pages 205-246 Income Tax Reduction and the Quantification of Welfare Gains — An Applied General Equilibrium Analysis....Pages 247-262 On the Evaluation of Tax Systems....Pages 263-280 Comprehensive versus Neutral Income Taxation....Pages 281-295 Neutral Taxation of Risky Investment....Pages 297-316 On Measuring the Welfare Cost of Public Expenditure: A Simple General Equilibrium Approach....Pages 317-337 Welfare Effects of Privatizing Public Enterprises....Pages 339-362 Measuring Environmental Benefits: A Comparison of Hedonic Technique and Contingent Valuation....Pages 363-400 Economic Impact of Emission Standards: A Computational Approach to Waste Water Treatment in Western Europe....Pages 401-422 Back Matter....Pages 423-424