Cultural Values and Social Planning: A Control Theory Approach to Satisfying a Social Welfare Criterion

A bstract . A method of social planning is presented which can be used to fulfill a social welfare criterion with normative values. The purpose is to show how a social welfare model which includes cultural norms can be optimized using classical control theory. Current literature stresses the importance of incorporating social indicators in welfare economics. Given a social welfare function which actively includes a hierarchy of cultural values , control theory can be used to set social policy to reach social goals. The approach is to define a set of desired cultural norms at some future time and then determine the social policy necessary to reach this state. Control theory is used to find the social plan consistent with attaining the set of desired values.     

Resource balance, limited information and public policy

The U.S. Federal Government through its expenditure programs is having a major impact on all forms of pollution abatement. Total expenditures on Federal environmental programs amounted to $3.3 billion in 1972. A program of this magnitude can easily lead to waste and expenditures on conflicting goals unless carefully managed.

In a recent article in the Am. Econ. Rev. William Baumol examined the theoretical justification for and attacks on the Pigouvian tax and subsidy approach to controlling externalities. He concluded that while it is theoretically possible to control externalities through Pigou's procedure, the existence of multiple equilibrium and information requirements make it impractical. He proposes an alternate approach which changes the policy goal from maximization of social welfare to generation of acceptable levels of externalities. His goals differ drastically from those of the resource balance model presented by Kneese, Ayres and D'Arge of maximization of social welfare. This paper will combine the concept of resource balance with the goal of obtaining acceptable level of externalities at minimum cost in the presentation of a theoretical model that can be operationalized.

This paper proposes a general equilibrium method, utilizing the decomposition principle of linear programming, that will permit expenditures and regulations only on non-conflicting goals and includes a feedback mechanism for determining if a program is wasteful in relation to other programs. The model has five advantages over earlier proposals: (1) it is a general equilibrium rather than partial equilibrium model; (2) it is dynamic rather than static; (3) limited information rather than complete information is required for its implementation; (4) the model is heuristic rather than optimizing in the sense that policy decisions always increase the efficiency of pollution control, but because of the existence of uncertainty, they cannot be interpreted as maximizing social welfare; (5) the model incorporates multiple rather than a single policy tool.     

TOURISM,RESIDENTS’ WELFARE AND ECONOMIC CHOICE: A LITERATURE REVIEW

Over the past decades, tourism development has raised economics, social and environmental issues, particularly for host communities. This paper provides a wide ranging review of the existing literature aimed at underpinning empirical tourism research with a robust economic framework. So far, tourism research has mostly focused on either quantitative or qualitative approaches that lack a strong economic theoretical setting. Most of the literature on resident's welfare analysis concentrates on their attitudes and perceptions without taking explicitly into account their preferences about policy development based on a cost‐benefit assessment. Hence, the purpose of this paper is to draw connections within the current body of research to explain the relationship between residents and tourism activity, as well as consumer theory and economic choice. In this way, it is possible to construct a multidimensional framework that allows one to analyse residents’ welfare in a systematic and more comprehensive manner.     

Optimal Social Design: Estimating a Social Welfare Function from Questionnaire Data

A social design x evokes a response y from a set of individuals. The value of the design is expressed in terms of a social welfare function which is derived from Arrow’s formulation of social choice. Making certain simplifying assumptions the social welfare function can be expressed in terms of individuals’ ideal designs. A method for estimating the social welfare function from quite limited empirical evidence is developed. The method is applied to an educational case study. There was considerable variation in individuals’ ideal designs. The components of the social welfare were estimated: the welfare ideal, the population sensitivity, the population variation, the deviation from the ideal and the welfare ceiling. Methodological problems are discussed.     

THE APPLICABILITY OF THE TRADITIONAL THEORY OF ECONOMIC POLICY

Abstract. The traditional theory of economic policy requires targets, instruments, an empirical economic model, and a social welfare or criterion function to be specified in order to derive the optimal economic policy. Empirical studies of reaction functions suggest that economic policy is carried out in some systematic manner, subject to interference from political factors. This survey addresses the problems of specifying, estimating and applying an economic model when economic policy is following a path specified by a reaction function. Attention is paid to rational expectations, the Lucas'critique, and the policy neutrality proposition. Lack of knowledge of the policy maker's objective function poses the most serious difficulty when applying the theory of economic policy. Various methods of determining this function are reviewed, and the possibility that policy makers might be satisficing is discussed. The role played by political factors is considered in the light of the public choice literature.     

Private law enforcement with competing groups

This paper introduces groups that are in conflict against each other in law enforcement policy. These groups can have an effect on the process of law enforcement by making upfront investments, such as bribes. We also investigate consequences when a policy maker acts to maximize a bribe instead of social welfare. Thus, this paper presents an inclusive framework for incorporating private law enforcement, corruption and avoidance activities. This article shows that this competition can lead to moderate and more efficient law enforcement activities. This indicates that inefficient law enforcement by authority with harm reduction motivation can be avoided. Additionally, this paper shows that depending on the policy maker’s objection between rent-seeking motivation or social welfare maximizer, deterrence effects vary. This paper provides a clear mechanism that the rent-seeking motivated policy maker tends to set less severe enforcement policies than the social welfare level.     

The political intergenerational welfare state

Using a three-period overlapping generations economy framework, we characterize an intergenerational welfare state with endogenous education and pension under voting. We show that although politically establishing Pay-As-You-Go (PAYG) social security in isolation in a dynamically efficient economy will always reduce the capital investment and therefore the social welfare as expected, in contrast politically implementing education-pension policy package instead can improve both human and physical capital accumulation and social welfare over laissez faire. However for this the political influence of the old has to be small thus limiting the size of the PAYG social security program.     

Optimal investment for executive stockholders with exponential utility

The scope of this paper is to enhance the model for the own-company stockholder (Desmettre et?al. in Math Methods Oper Res 72(3):347?C378, 2010), who can voluntarily performance-link his personal wealth to his management success by acquiring stocks in the own-company whose value he can directly influence via spending work effort. The executive is thereby characterized by a parameter of risk aversion and the two work effectiveness parameters inverse work productivity and disutility stress. We extend the model to a constant absolute risk aversion framework using an exponential utility/disutility setup. A closed-form solution is given for the optimal work effort an executive will apply and we derive the optimal investment strategies of the executive. Furthermore, we determine an up-front fair cash compensation applying an indifference utility rationale. Our study shows to a large extent that the results previously obtained are robust under the choice of the utility/disutility setup.     

The Friendly Societies

Had the 1911 national insurance scheme been voluntary, permitting opting out, friendly societies would have grown significantly larger in the inter-war year. A renaissance of voluntary action in social security and welfare would require a rodical overhaul of the legislative and policy framework.     

Paradigm Shifts in Social Housing after Welfare-State Transformation: Learning from the German Experience

Welfare-state transformation and entrepreneurial urban politics in Western welfare states since the late 1970s have yielded converging trends in the transformation of the dominant Fordist paradigm of social housing in terms of its societal function and institutional and spatial form. In this article I draw from a comparative case study on two cities in Germany to show that the resulting new paradigm is simultaneously shaped by the idiosyncrasies of the country's national housing regime and local housing policies. While German governments have successively limited the societal function of social housing as a legitimate instrument only for addressing exceptional housing crises, local policies on providing and organizing social housing within this framework display significant variation. However, planning and design principles dominating the spatial forms of social housing have been congruent. They may be interpreted as both an expression of the marginalization of social housing within the restructured welfare housing regime and a tool of its implementation according to the logics of entrepreneurial urban politics.     

食品安全规制水平的选择与优化——基于社会福利函数的分析

食品安全规制水平影响着消费者的福利.基于社会福利最优的诉求,本文分别对功利主义、精英者以及罗尔斯社会福利函数形式下的食品安全最优规制水平进行了讨论,认为食品安全最优规制水平的选择,不但要考虑消费者的效用诉求、伦理约束,还要考虑消费者的健康权以及消费者食品安全认知的局限性.基于此,本文提出了对低收入者补贴的政策选择,在此政策下,最优的食品安全规制水平将高于功利主义社会福利函数形式下的最优规制水平,并且社会福利得到了改善.     

Social dumping and relocation: is there a case for imposing a social clause?

Public opinion in Europe seems worried about the relocation of production plants toward low wage countries often accused of practicing ‘social dumping’. To reduce the incentives for relocation trade unions proposed the adoption of ‘social clauses’ protecting domestic markets from commodities produced in countries where minimal labor condition are not met. We analyze the effects of the adoption of a social clause in a vertically differentiated Bertrand duopoly. We assess how such a policy affects firms’ relocation decisions in order to be able to assess its welfare implications. We also characterize the optimal social clause policy, both under domestic welfare maximization, and from an efficiency point of view. While we show that a social clause policy cannot be dismissed on domestic (or world) welfare grounds, its case is weaker the higher is the domestic wage and the lower is the foreign wage.     

How important is fiscal policy cooperation in a currency union?

By constructing a dynamic stochastic general equilibrium model, which assumes a currency union consisting of two countries with nontradables, we study the importance of fiscal policy cooperation. As shown in the previous studies, we find that the role of fiscal policy is important in maximizing social welfare. However, we have a contrary result for fiscal policy cooperation. While the previous studies highlight that fiscal policy cooperation has a nontrivial effect in maximizing social welfare, we show that fiscal policy cooperation has no benefits, regardless of the share of nontradables. Self-oriented fiscal policy can replicate social welfare under the cooperative setting.     

Business-oriented environmental regulation: Measurement and implications for environmental policy and business strategy from a sustainable development perspective

Business-oriented environmental regulation is expected to have a fundamental role in mitigating the adverse effects of human activity on the natural environment. However, its effectiveness and efficiency are not well established. A systematic literature review reveals validity and reliability problems in the measurement of business-oriented environmental regulation. From a sustainable development perspective, we develop a theoretical framework that aims to enhance the measurement and assessment of this kind of regulation. Our theoretical framework proposes that the goals of business-oriented environmental regulation must articulate a measurement system in a 3 × 3 matrix: three measurement levels (stringency, response, and outcome—in this cause–effect order) and three sustainability dimensions (environmental, social, and economic—in this constraint order). For each cell, we propose a combination of objective and subjective indicators. This theoretical framework expands existing approaches to business-oriented environmental regulation measurement by integrating a sustainable development perspective into a measurement framework in a structured theory-driven manner. Not only will this measurement system be useful for improving environmental policy, but it will also allow companies to improve their business strategy and come closer to complying with environmental regulations in order to effectively contribute to solutions for current environmental problems and help achieve a sustainable development.     

资源型城市经济转型路径研究——以山东省枣庄市为例

资源型城市因资源消耗过度、环境污染、就业困难等问题,经济发展受到日趋严重的限制。以煤炭资源型城市———枣庄市为例,首先在明确资源型城市概念的基础上,分析了资源型城市发展所面临的重大经济、社会、资源环境问题。其次,通过资源型城市产业转型理论和模式分析,提出资源型城市的经济转型应以经济持续发展、公共服务均等化、生态环境与社会经济协调发展为目标。最后结合枣庄市自身资源特征、区位条件、发展阶段以及当前所面临的困境,提出了与枣庄市相似的资源型城市发展模式与对策,为进一步贯彻落实国务院关于促进资源型城市可持续发展的意见提供了科学依据。     

Optimal fiscal and monetary policy with occasionally binding zero bound constraints

This paper studies optimal fiscal and monetary policy when the nominal interest rate is subject to the zero lower bound (ZLB) constraint in a stochastic New Keynesian economy. In the baseline model calibrated to match key features of the U.S. economy, it is optimal for the government to increase its spending when at the ZLB in the stochastic environment by about 60 percent more than it would in the deterministic environment. The presence of uncertainty creates a unique time-consistency problem if the steady state is inefficient. Although access to government spending policy increases welfare in the face of a large deflationary shock, it decreases welfare during normal times as the government reduces the nominal interest rate less aggressively before reaching the ZLB.     

Axiomatization of weighted (separable) utility

Nontrivial decision problems typically involve a trade-off among multiple attributes of choice options. One simple way of resolving such trade-offs is to aggregate multiple attributes into one real-valued index, known as weighted or separable utility. Applications of weighted utility can be found in choice under risk (expected utility) and uncertainty (subjective expected utility), intertemporal choice (discounted utility) and welfare economics (utilitarian social welfare function). This paper presents an alternative behavioral characterization (preference axiomatization) of weighted utility. It is shown that necessary and sufficient conditions for weighted utility are completeness, continuity, bi-separable transitivity (and transitivity if none of the attributes is null, or inessential).     

The Desirability of In‐kind Transfers in the Presence of Distortionary Taxes

A standard argument in welfare economics maintains that private goods should not be publicly provided, because cash transfers are always superior to in‐kind transfers. However, this conclusion does not hold in second best economies. A strong case for the desirability of in‐kind transfer in the presence of distortionary taxes has been made in various recent contributions. Here, we survey the arguments provided in these papers, using a common theoretical framework which enables us to present more clearly the similarities and the differences among the various papers. The use of a common formal model helps us to show how the rationale for public provision of private goods is sensitive to the form of the tax system. It also helps us to provide an explanation why mandatory and non‐mandatory in‐kind transfer schemes have the same effects on social welfare. Finally, we offer some considerations on the relevance of the theory of in‐kind transfers for policy action. JEL Classification Number: H42     

Integrating fundamental model uncertainty in policy analysis: A Bayesian averaging approach combining CGE-models with metamodeling techniques

Sustainable economic development in the future is driven by public policy on regional, national and global levels. Therefore a comprehensive policy analysis is needed that provides consistent and effective policy support. However, a general problem facing classical policy analysis is model uncertainty. All actors, those involved in the policy choice and those in the policy analysis, are fundamentally uncertain which of the different models corresponds to the true generative mechanism that represents the natural, economic, or social phenomena on which policy analysis is focused. In this paper, we propose a general framework that explicitly incorporates model uncertainty into the derivation of a policy choice. Incorporating model uncertainty into the analysis is limited by the very high required computational effort. In this regard, we apply metamodeling techniques as a way to reduce computational complexity. We demonstrate the effect of different metamodel types using a reduced model for the case of CAADP in Senegal. Furthermore, we explicitly show that ignoring model uncertainty leads to inefficient policy choices and results in a large waste of public resources.