Value-driven Multidimensional Welfare Analysis: A Dominance Approach with Application to Comparisons of European Populations

Nikolaos Argyris*, Lars Peter Østerdal, M. Azhar Hussain

*Corresponding author for this work

Research output: Working paperResearchpeer-review

77 Downloads (Pure)

Abstract

We introduce a framework for social welfare evaluation that accommodates multiple dimensions of individual welfare, permits incorporating value judgements and enables robust social welfare comparisons. Our framework follows a dominance-based paradigm and utilises non-decreasing and potentially concave multi-attribute functions to model individual welfare. We describe how this permits capturing a variety of trade-offs between welfare attributes as well as incorporating concerns about distributional inequality in social welfare evaluation. We derive theoretical results which enable the practical implementation of our approach. Our framework incorporates a welfare measurement scale. This facilitates a richer form of analysis, compared to other dominance-based methods, from which we can gauge the overall level of social welfare in different populations relative to some meaningful benchmarks, as opposed to deriving only partial rankings. We illustrate the application of our framework with a case study investigating social welfare across 31 European countries based on the EU-SILC dataset.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School, CBS
Number of pages30
Publication statusPublished - 2023
SeriesWorking Paper / Department of Economics. Copenhagen Business School
Number12-2023

Keywords

  • Multiple criteria analysis
  • Social welfare
  • Inequality aversion
  • Value judgements
  • Multidimensional stochastic dominance

Cite this