Definition of a Kaldor-Hicks improvement & efficiency The notion of a Kaldor-Hicks improvement is a way of evaluating policies. As we shall see, it is a very bad one. A change is a Kaldor-Hicks improvement if and only if: A) It is a Pareto improvement (at least one party wins and no parties lose) OR … Continue reading Against Kaldor-Hicks, or an ethical weight of zero on distributional concerns is still an ethical weight.
Category: Welfare Economics & Inequality
GDP undervalues government services
I. Gross domestic product can be calculated in many ways, but one of the most common is: (Government expenditure)+(Consumption)+(Investment)+((Exports)-(Imports)) To see why government expenditure is under-counted consider two countries, one of which provides all of its health care through the public sector, the other through the private sector. In the latter case, health care is … Continue reading GDP undervalues government services
Jeff Beezos absolutely could afford to pay his employees much better
You occasionally see arguments that, while CEO's are spectacularly rich, those riches are drop in the ocean compared to the quantum that would be required to give a real pay rise to workers. Of course the main reply here is that CEO's are emblematic of a whole bunch of people who are overpaid relative to … Continue reading Jeff Beezos absolutely could afford to pay his employees much better
The Heritage Foundation Economic Freedom Index is bad
If you enjoy this post, check out my (free) book https://deponysum.com/2020/03/30/something-to-read-in-quarantine-essays-2018-to-2020/ TLDR: The problem with freedom indexes is this. They are aggregates of separate variables, some of which indicate small government, others of which indicate what would uncontroversially be regarded as ‘good government’. It is the good government indicators, not the small government indicators, which … Continue reading The Heritage Foundation Economic Freedom Index is bad
Muh research budgets: Against a disingenuous defence of big pharma
Americans pay vastly more for many drugs than other countries. There are probably many causes of this, but one is the refusal of the federal government to collectively bargain about prices with pharmaceutical companies, unlike many other countries. The right wing defends this state of affairs with the following argument- these higher prices allow drug … Continue reading Muh research budgets: Against a disingenuous defence of big pharma
Delayed Impact of Fair Machine Learning: A response
Lydia T. Liu, Sarah Dean, Esther Rolf, Max Simchowitz and Moritz Hardt in “Delayed Impact of Fair Machine Learning” rightly make the point that in considering notions of fairness, it is critical that we consider them dynamically in terms of their long-term effects on a population, and not just statically. They argue that seemingly attractive and fair … Continue reading Delayed Impact of Fair Machine Learning: A response
The efficiency game
Bibliographical note: This essay develops ideas owing to Kieran Latty, who is in turn developing ideas in Kalecki. 0. Previously I’ve argued that efficiency (defined as Kaldor-Hicks efficiency) cannot be automatically assumed to be in the interests of the poor under conditions of oligarchy. Now I want to argue the reverse- it can’t be automatically … Continue reading The efficiency game
Median incomes aren’t keeping up with growth- however closely you look
By now a lot of people are aware that median incomes haven’t moved all that much in a long time. Many people are even starting to accept that this is evidence the economy is buggered, from an ordinary person’s point of view. This distressing reality is pretty well communicated by this chart: However one occasionally … Continue reading Median incomes aren’t keeping up with growth- however closely you look
The effects of Kaldor-Hicks improvements in an oligarchical society
0. Given the (debatable) difficulties of interpersonal utility comparison, the Kaldor-Hicks compensation test has been proposed as a way of assessing whether or not a given policy improves social welfare. To understand the idea of a Kaldor-Hicks improvement, we first must introduce the idea of a Pareto improvement, which a Kaldor-Hicks improvement generalises. A policy … Continue reading The effects of Kaldor-Hicks improvements in an oligarchical society
Redistribution is not bad for economic growth: Evidence from the IMF
For the study that this post is based on, click here. In a previous post I outlined the main case for redistributing wealth- an extra hundred dollars means a lot more to someone struggling to make ends meet than to a millionaire. We even put some figures on how much inequality ‘costs’ through exactly this … Continue reading Redistribution is not bad for economic growth: Evidence from the IMF
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