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EXACT AND SUPERLATIVE WELFARE CHANGE INDICATORS
Author(s) -
Diewert W. E.
Publication year - 1992
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1992.tb01282.x
Subject(s) - superlative , economics , welfare , order (exchange) , function (biology) , econometrics , variation (astronomy) , property (philosophy) , mathematical economics , mathematics , microeconomics , philosophy , linguistics , physics , finance , epistemology , evolutionary biology , astrophysics , market economy , biology
An exact welfare change indicator is defined to be a known function of the price and quantity data for two periods (for a utility maximizing consumer) which is exactly equal to the Hicksian equivalent variation. A welfare change indicator is termed superlative if it is exactly equal to the equivalent variation for an expenditure function which has a second‐order approximation property. The paper exhibits a number of superlative welfare change indicators, and also reviews the earlier attempts of Hicks and Weitzman to obtain equivalent variation measures that had a second‐order approximation property.