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Price index dispersion and utilitarian social evaluation

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  • Muller, Christophe

Abstract

The living standard indicator in utilitarian social evaluation functions (USEF) is the ratio of a nominal living standard and a price index. We show that under weak association of price indices and nominal living standards and usual concavity conditions on utility functions, utilitarian social welfare increases with price index dispersion when the aggregate price level is superior to the arithmetic mean of price indices, and diminishes when it is inferior to the harmonic mean.
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Suggested Citation

  • Muller, Christophe, 2005. "Price index dispersion and utilitarian social evaluation," Economics Letters, Elsevier, vol. 89(2), pages 141-146, November.
    • Handle: RePEc:eee:ecolet:v:89:y:2005:i:2:p:141-146
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    Cited by:

    1. Christophe Muller & Nouréini Sayouti, 2021. "How does information on minimum and maximum food prices affect measured monetary poverty ? Evidence from Niger," Working Papers halshs-03097641, HAL.
    2. Christophe Muller, 2023. "Poverty measurement under income and price dispersion," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 14, pages 151-160, Edward Elgar Publishing.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D6 - Microeconomics - - Welfare Economics

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