Radner’s cost–benefit analysis in the small: An equivalence result

I show that local changes in five welfare measures are equal: a measure proposed by Radner (1993); consumers’ surplus; the Slutsky change in real wealth; the Divisia quantity index, and Debreu’s (1951) coefficient of resource utilization (the last two rescaled in units of a numeraire good). •I show...

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Bibliographic Details
Published in:Economics letters 2013-09, Vol.120 (3), p.570-572
Main Author: Schlee, Edward E.
Format: Article
Language:English
Subjects:
Coefficient of resource utilization
Consumers’ surplus
Cost benefit analysis
Divisia index
Local cost–benefit analysis
Slutsky compensation
Studies
Welfare economics
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Summary:I show that local changes in five welfare measures are equal: a measure proposed by Radner (1993); consumers’ surplus; the Slutsky change in real wealth; the Divisia quantity index, and Debreu’s (1951) coefficient of resource utilization (the last two rescaled in units of a numeraire good). •I show that local changes in five welfare measures are equal.•Two are a measure proposed by Radner and the coefficient of resource utilization.•Two others are consumers’ surplus and the Slutsky change in real wealth.•The last is the Divisia quantity index.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2013.06.012