Shaking Up Measures Of Consumer Economic Well-being

The author analyzes measures of consumer well-being, such as the compensating variation, equivalent variation, and consumer surplus, and proposes a test to track utility. He presents a variant of consumer surplus called the consumer's index and a generalization that applies to nonhomothetic demands. Broad measures of consumer well-being, such as the Human Development Index, will be encompassed.

Format: Hardback
Length: 132 pages
Publication date: 17 May 2022
Publisher: World Scientific Publishing Co Pte Ltd

The author delves into the realm of consumer well-being, examining three fundamental neoclassical measures: compensating variation, equivalent variation, and consumer surplus. This book aims to answer the pressing question: which of these measures best captures consumer well-being? To address this, Prof. ten Raa presents a novel test that measures must fulfill to be considered valid in tracking utility. This test will serve as a framework for sorting and analyzing the various measures discussed throughout the book.

The journey culminates in the development of a variant of consumer surplus, known as the consumer's index, which encompasses nonhomothetic demands. Furthermore, the book explores various adaptations of the consumer's index, including those applicable to demand functions with income effects, even nonlinear ones.

In addition to these quantitative measures, the book also discusses so-called broad measures of consumer well-being, such as the Human Development Index. By integrating these diverse perspectives, the author provides a comprehensive exploration of consumer well-being, challenging prevailing notions and offering new insights into this vital aspect of economic analysis.

ISBN-13: 9789811249785