Title: Individual Preferences, Efficiency, and Cost-Benefit Analysis
Abstract: Individual preferences have a central role in mainstream economic theory not only because they can be used to explain and predict individual and group behavior, but also because they can be used to evaluate the aggregate outcomes of such behavior. Thus, they are employed to examine whether a particular outcome is good or bad, and also to evaluate if a change that occurs is good or not. More specifically, they are utilized for evaluating the desirability of particular economic policies and to examine whether this or that policy change should be undertaken. For instance, should the government cut taxes on rich households? Or they can be used to answer whether a policy change which has been undertaken has been successful or not. For instance, is the increase in the tax rate on cigarette sales to be considered a success? Even more specifically, they are used to evaluate specific projects: Should the city government build a sports stadium? This chapter will examine to what extent such evaluations based on individual preferences are justified.KeywordsIndividual PreferenceConsumption CapitalConsumer SurplusSocial Welfare FunctionUtility LevelThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
Publication Year: 2010
Publication Date: 2010-01-01
Language: en
Type: book-chapter
Indexed In: ['crossref']
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