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Efficiency, Equality and Public Policy : With A Case for Higher Public Spending - Yew-Kwang Ng

Efficiency, Equality and Public Policy

With A Case for Higher Public Spending

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This book provides a tremendous simplification in the formation of economic policies, in cost-benefit analysis in particular. It advances compelling arguments for the exclusive concern of efficiency ('a dollar is a dollar') in all specific areas of public economic policy, leaving the objective of equality to be achieved through the general tax/transfer system. Interpersonal comparisons of welfares are needed for this latter efficiency/equality trade-off. Public policies should ultimately maximize the sum of individual welfares which should be individual happiness rather than preferences. Economists overestimate the costs of public spending by emphasizing the excess burden of taxation, ignoring the offsetting effects on the spending side, the existence of environmental disruption effects and burden-free taxes on diamond goods. Relative-income effects cause a bias in favour of private consumption which is no longer conducive to social happiness.

Industry Reviews

'Kwang Ng is the leading proponent of the use of cardinal, interpersonally comparable utilities in economics. In this book he both defends their use and illustrates their application. Ng's analysis is both lucid and provocative. A fascinating journey into applied welfare economics.' - Professor Dennis Mueller, former President of the Public Choice Society and the Industrial Organization Society, USA 'Yew-Kwang Ng has been one of the most original minds studying the foundations of economic policy analysis. His work has now been brought together in one place, where the interrelations of his ideas can be most fruitfully seen. His analyses bring together the philosophical foundations and the elements of positive economic analysis to clarify the rules by which good public decisions about the economy can be made. It will have ideas new to every reader.' - Kenneth J.Arrow, Professor of Economics, Stanford University

Prefacep. x
Introductionp. 1
A dollar is a dollar: a simple solution to the big efficiency-equality tradeoffp. 1
A partial resurrection of the old 'new welfare economics'?p. 1
Introductory summaryp. 2
A case for higher public spendingp. 4
The misguided consensusp. 5
Three basic problems of social choice/public policyp. 7
Some specific points madep. 9
A methodological notep. 9
What this book is not aboutp. 10
The Foundation of Public Economic Policyp. 13
The Necessity of Interpersonal Cardinal Utilityp. 15
An intuitive explanation using a parent's choicep. 15
Economists' misplaced hostility against cardinal utilityp. 17
The impossibility of social choice based on ordinal utilitiesp. 21
Welfarismp. 24
The Sen-Ng debate on welfarism: an appraisalp. 24
Another argument for welfarismp. 30
Rational individualism implies welfarismp. 32
Utility, Informed Preference, or Happinessp. 36
Non-affective altruism: the pure concern for the welfare of othersp. 37
Irrational preferencesp. 45
Autonomous desiresp. 52
Why is happiness fundamental?p. 54
Utilitarianismp. 57
Compelling arguments for utilitarianismp. 57
Rational individualistic egalitarianism implies utilitarianismp. 62
A defence of Harsanyi against some recent criticismsp. 66
A defence of using just perceptible incrementsp. 72
Utilitarianism and process fairnessp. 76
A Dollar is a Dollar: Solution to the Paradox of Interpersonal Cardinal Utilityp. 82
The paradox of interpersonal cardinal utilityp. 82
The proposed solutionp. 83
Economists should be in favour of reversed weighting!p. 90
Some qualificationsp. 92
Concluding remarksp. 97
Economics versus Politicsp. 99
How Much Should the Government Spend?p. 103
A Case for Higher Public Spendingp. 105
Some simple theories of government spendingp. 105
Inefficiency in public spending may increase its optimal levelp. 108
General taxation may be more corrective than distortivep. 111
Diamond effects and burden-free taxesp. 111
Relative-income effects bias against public expenditurep. 113
The unimportance of absolute incomep. 115
Welfare-improving public expendituresp. 119
Concluding remarksp. 120
The Appropriate Benefit-Cost Ratio for Public Spendingp. 124
The conventional viewp. 124
Kaplow's argument and the principle of 'a dollar is a dollar'p. 126
Reconciling Kaplow and Feldsteinp. 130
Concluding remarksp. 134
Concluding Remarksp. 135
Electrical Brain Stimulation: a Case Showing the Importance of Public Spending in Researchp. 137
Misconceptions on the costs of public spendingp. 137
Direct access to intense pleasurep. 137
Enormous benefitsp. 138
Safe and long-lasting pleasurep. 138
Pure Egalitarianism: a Critiquep. 141
Why is happiness the only ultimate consideration?p. 141
Equality in the welfare weightsp. 143
The libertariansp. 143
Rawlsp. 144
Pure and welfare egalitarianismp. 145
Sen and capability egalitarianismp. 148
Concluding remarkp. 150
Economic Growth Increases the Optimal Share of the Public Sectorp. 151
Non-Affective Altruism: When the Pareto Principle is Unacceptablep. 158
The Pareto principlep. 158
When the weak Pareto principle is unacceptablep. 159
The case of affective altruismp. 161
Should voters be asked to suppress their non-affective altruism?p. 162
The Bergson-Samuelson Tradition Implies Individualism, Independence, and Ordinalismp. 163
Inefficiency in Provision May Increase Optimal Public Spendingp. 164
Notesp. 165
Referencesp. 169
Name Indexp. 184
Subject Indexp. 188
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9780333671658
ISBN-10: 0333671651
Audience: Professional
Format: Hardcover
Language: English
Number Of Pages: 189
Published: 19th April 2000
Country of Publication: GB
Dimensions (cm): 21.59 x 13.97  x 1.6
Weight (kg): 0.4
Edition Number: 1