Welfare Economic Theory Research Articles

Economic Impact of Health Expenditures: Panel Data Analysis for Selected Economies

It is estimated that healthcare services will increasingly strain public healthcare expenditures in the near future. Public health expenditures yield more effective outputs than household expenditures do. Due to its direct impact on human capital, public health displays a positive correlation with labor productivity, personal expenditures, and GDP indicators. In welfare economics theory, the examination of economic and social welfare focuses on the analysis of the distribution of economic resources among social actors. During the 2003-2016 timeframe in Turkey, Ukraine, Moldova, Poland, and South Korea, this research examined several health care expenditures. These included the proportion of the population spending more than 10 pct of their household consumption or income on out-of-pocket health care expenses, current health expenditure per capita, domestic general government health expenditure per capita, and domestic private health expenditure per capita. To conduct the panel data analysis, the "domestic private health expenditure per capita" data was utilized. Based on the research findings, an increase in domestic government health expenditures in certain countries results in an escalation of household health expenditures, while an increase in private sector health spending leads to a reduction in household health expenditures.

Introducing a Novel Framework for the Analysis and Assessment of Transport Projects in City Regions

A profound appraisal framework has been developed and refined in transport economics and planning literature for decades, mainly characterised by welfare economic theory, cost–benefit analysis, and transport demand modelling. In summary, the appraisal methodology and its applications have concentrated on single infrastructure measures, marginal impacts identified through ceteris paribus comparisons, forecasts based on trends from the past, and monetary assessments of all quantifiable impacts. However, this framework has been continuously contested in transport planning literature, for instance, for its focus on travel demand and short-term travel time savings. Therefore, we suggest a novel approach for planning and assessing transport schemes in city regions, combining accessibility analyses, quantitative target indicators, and cost-effectiveness analysis. We develop and test this approach by assessing a proposed underground rail project in the Munich city region, the U5 southeast extension. In this case, we define an accessibility target level and estimate the potential for push measures along with the U5 project. We find modest impacts on quantitative targets in the Munich city region: Even when the U5 southeast extension is bundled with push measures in selected transport cells, the contribution to passenger transport-related carbon dioxide emission targets and primary energy consumption targets is low. Nevertheless, we demonstrate that the proposed assessment framework can support strategic transport planning in city regions. We argue for a change in perspective towards supply-side-oriented urban transport planning. Our proposed methodology is a first step in a different direction towards a sustainable mobility planning paradigm.

THE THEORY OF WELFARE ECONOMICS AND TAX REGULATIONS: AN EMPIRICAL EXAMPLE OF PIGOUVIAN TAXES

The aim of this paper is to present the impact of the economic theories and empirical studies on the contemporary tax laws and regulations in numerous jurisdictions, based on a case study of the economic concept of Pigouvian taxes which stems from the neoclassical theory of welfare economics. The author presents the theoretical concept of the Pigouvian taxation and its econometric verification and tries to demonstrate that the empirical examples of the implementation of such fiscal instruments have proved to be effective based on the quantitative assessment. However, serious deficiencies in the methodology of empirical studies on this phenomenon can also be identified, which affects the possibility of assessing the potential practical implications of introducing such mechanisms. Nevertheless, as the author demonstrates by referring to the World Bank data, the discussed concept significantly influences contemporary tax law in many countries and is a source of inspiration for many tax jurisdictions. The analysis carried out in this paper indicates that not every implementation and post-hoc evaluation of economic theory implemented into tax systems can be effectively studied with the use of economic analysis of law; when analysing regulations introduced to influence the behaviour of individuals, it is also necessary to take into account the research in other disciplines, for example psychology and sociology, even if the inspiration for the regulations in question was well-grounded and developed in economic theories. For this reason, it can be argued that economic analysis of law, also referred to as law and economics, although a valuable cognitive approach, should never be the only basis of analysis, even if a regulation in question has a strictly economic origin.

A Welfare Economic Approach to Planetary Boundaries

AbstractThe crises of both the climate and the biosphere are manifestations of the imbalance between human extractive, and polluting activities and the Earth’s regenerative capacity. Planetary boundaries define limits for biophysical systems and processes that regulate the stability and life support capacity of the Earth system, and thereby also define a safe operating space for humanity on Earth. Budgets associated to planetary boundaries can be understood as global commons: common pool resources that can be utilized within finite limits. Despite the analytical interpretation of planetary boundaries as global commons, the planetary boundaries framework is missing a thorough integration into economic theory. We aim to bridge the gap between welfare economic theory and planetary boundaries as derived in the natural sciences by presenting a unified theory of cost-benefit and cost-effectiveness analysis. Our pragmatic approach aims to overcome shortcomings of the practical applications of CEA and CBA to environmental problems of a planetary scale. To do so, we develop a model framework and explore decision paradigms that give guidance to setting limits on human activities. This conceptual framework is then applied to planetary boundaries. We conclude by using the realized insights to derive a research agenda that builds on the understanding of planetary boundaries as global commons.

Understanding mobility inequality through the lens of economic welfare: The difference in willingness-to-pay and actual fare matters

Existing studies investigate mobility inequality from the perspectives of accessibility and non-economic welfare. This paper proposes to analyze mobility inequality through the lens of economic welfare, which reflects the difference of passengers' willingness-to-pay and the actual fare. Based on the theory of welfare economics, this paper first defines the concept and specifies the formula of economic welfare with regards to mobility inequality. Then, economic welfare is calculated regarding the elderly's bus fare in Beijing and econometric models are estimated to examine how mobility inequality is socially and spatially distributed. Results show that those with low income and living in the low-unit-house-price communities in the city center are the marginalized group. The benefits of introducing economic welfare to mobility inequality studies include (1) it can improve the objectivity in assessing travelers' feelings and identifying marginalized groups; (2) the concept of economic welfare can directly correspond to the “sense of gain” policy initiative in China; (3) the perspective of economic welfare can inform transportation pricing policies to mitigate inequality issues. To conclude, this paper contributes to the existing literature by a new perspective of economic welfare that enriches the current dialogue of mobility inequality among the geographical, transportation, sociological and psychological researchers. • Economic welfare is introduced to measure mobility inequality. • Economic welfare can echo Chinese sense of gain initiative. • Young elderly's bus fare increases would incur inequality. • City planners in Beijing are suggested to propose fare increase policies based on income to promote social inclusion. • More routes around the low-unit-house-price communities may be planned and suburban-city express routes may charge a premium.

Does Technical and Democratic Governance Have the Potential to Enhance Health Spending Allocations?

Abstract Nowadays, the medical systems of the EU Member States have a need for more efficient public policies and strategies to integrate the new societal challenges, the fragile economic recovery from the COVID-19 pandemic, and sustain the development of health systems. This research explores the relationship between public governance and health expenditures allocation, under the theory of welfare economics and the concern for economic development. The research approaches both qualitative and quantitative methodologies. The first refers to bibliometric analysis and review of the existing literature, followed by data mapping process to rank the EU countries based on the variables employed. The quantitative approach also includes advanced empirical analyses (principal component analysis - PCA and regression analysis) performed over the period 2007-2020. Two indices were created through PCA, technical governance and democratic governance, gathering the effects from different world governance indicators. The main results reveal that both governance indices have a direct influence on health expenditures per capita, while GDP growth, applied as a control variable, negatively influences health expenditures. Our results emphasise a need to redesign the public governance of health systems in terms of health spending allocations and increase investments in healthcare to support economic growth in the long run.

Competitive equilibriums and social shaping for multi-agent systems

In this paper, we study multi-agent systems with decentralized resource allocations. Agents have local demand and resource supply, and are interconnected through a network designed to support sharing of the local resource; and the network has no external resource supply. It is known from classical welfare economics theory that by pricing the flow of resource, balance between the demand and supply is possible. Agents decide on the consumed resource, and perhaps further the traded resource as well, to maximize their payoffs considering both the utility of the consumption, and the income from the trading. When the network supply and demand are balanced, a competitive equilibrium is achieved if all agents maximize their individual payoffs, and a social welfare equilibrium is achieved if the total agent utilities are maximized. First, we consider multi-agent systems with static local allocations, and prove from duality theory that under general concavity assumptions, the competitive equilibrium and the social welfare equilibrium exist and agree. Next, we show that the agent utility functions can be prescribed in a family of socially admissible functions, under which the resource price at the competitive equilibrium is kept below a threshold. Finally, we extend the study to dynamical multi-agent systems where agents are associated with dynamical states from linear processes, and prove that the dynamic competitive equilibrium and the dynamic social welfare equilibrium continue to exist and coincide with each other. In addition, we also present a recursive representation of the competitive equilibriums using dynamic programming, and a receding horizon approach for smoothing the dynamic pricing as a dynamic competitive equilibrium social shaping method.

Agricultural Insurance and Agricultural Economic Growth: The Case of Zhejiang Province in China.

Based on the theories of welfare economics, this paper analyzed the mechanism of agricultural insurance (AI) affecting agricultural economic growth (AEG), theoretically, and carried out an empirical analysis by using the random effects model and thirteen years of panel data, which included the annual data of 11 cities in Zhejiang Province, China, from 2007 to 2019. The gross output value of agriculture, forestry, animal husbandry, and fishery (GOVA) of 11 cities in Zhejiang Province is selected as the explained variable, agricultural insurance premium income (AIPI) as an explanatory variable. We selected area of waterlogging removal (AWR), rural electricity consumption (REC), total power of agricultural machinery (TPAM), and crop-sown area (CSA) as control variables. The study shows that: (1) the AIPI has a significant positive impact on the growth of GOVA. When other conditions remain unchanged, a 1% increase in AIPI increases the GOVA by 0.166%, accordingly; (2) The control variables of REC, TPAM, and CSA are statistically significant for the growth of the GOVA. The elasticity coefficient of REC is 0.325, the elastic coefficient of the TPAM is 0.287, and the elasticity coefficient of CSA is −0.281.

Improvement of the Taxation System and its Theoretical Justification

Taxes are one of the main levers of government influence on a national economy and, at the same time, the most important tool for replenishing the governmental budget. These considerations justify the enormous importance of the objective, correct and harmonious construction of a given taxation system, without which the effective functioning and sustainable development of the national economic complex of the country is inconceivable. Currently, the tax system in Russia is undergoing certain changes, especially in terms of direct taxation of income of individuals, which require a comparison of the decisions made with regard to the theoretical provisions of tax optimization. Consequently, the theoretical study of applicable and potentially available tax instruments in the current period is of particular relevance. The author's study of the theory of welfare economics as a basis for seeking and making practical solutions in the formation and improvement of the national tax system is a monographic study of the works of foreign authors and the interpretation of their results concerning the realities of Russian tax policy to substantiate the changes made to the latter or to refute the feasibility of them. In achieving this objective, the methods of scientific analysis were used: dialectic analysis and synthesis. The study is based on the review of relevant scientific and periodic economic literature. The authors conclude that the simultaneous application of direct and indirect taxes is advisable, provided that the determination of the mechanisms for their use is based on different principles barizing out of the theory of welfare economics. The authors indicate that the taxation of income of individuals is the one direct tax, the application of which is often based not only on considerations of economic efficiency, but also on political and sociological motives, in particular, the concept of justice, which, by definition, is subjective and differs among different social groups and political parties. Nevertheless, the authors emphasize the mandatory nature of the non-linear taxation of income of individuals from both economic and political positions. The paper also concludes that it is permissible to use indirect taxation, in particular, in the form of a value added tax. However, in the case of the value added tax, in contrast to the income tax, the preference for applying the same tax rates and avoiding the use of exemptions from the tax base is justified.

Against Paretianism: A Wealth Creation Approach to Business Ethics

How should we distinguish between ethical and unethical ways of pursuing profit in a market? The market failures approach (MFA) to business ethics purports to provide an answer to this question. I argue that it fails to do so. The source of this failure is the MFA’s reliance on Pareto efficiency as a core ethical principle. Many ethically “preferred” tactics for seeking profit cannot be justified by appeal to Pareto efficiency. One important reason for this is that Pareto efficiency, as understood by the theory of welfare economics upon which the MFA relies, assumes a static conception of efficiency. This is a problem because many ethically “preferred” tactics can only be justified by appeal to dynamic efficiency considerations. I argue that, instead of Pareto efficiency, we should look to the value of wealth creation to understand the ethical constraints on how market actors may pursue profit.

Upward-scaling tipping cascades to meet climate goals: plausible grounds for hope

ABSTRACT Limiting global warming to well below 2°C requires a dramatic acceleration of decarbonization to reduce net anthropogenic greenhouse gas emissions to zero around mid-century. In complex systems – including human societies – tipping points can occur, in which a small perturbation transforms a system. Crucially, activating one tipping point can increase the likelihood of triggering another at a larger scale, and so on. Here, we show how such upward-scaling tipping cascades could accelerate progress in tackling climate change. We focus on two sectors – light road transport and power – where tipping points have already been triggered by policy interventions at individual nation scales. We show how positive-sum cooperation, between small coalitions of jurisdictions and their policymakers, could lead to global changes in the economy and emissions. The aim of activating tipping points and tipping cascades is a particular application of systems thinking. It represents a different starting point for policy to the theory of welfare economics, one that can be useful when the priority is to achieve dynamic rather than allocative efficiency. Key policy insights Pricing policies and targeted investments that bring clean technologies below the threshold of cost-parity with fossil fuel technologies can trigger reinforcing feedbacks that cascade up scales to propel disproportionately rapid decarbonization. Traditional approaches to climate policy based on welfare economics principles of minimizing marginal abatement costs, and pricing externalities, are likely to miss these opportunities. Systems thinking can help identify ways for policy to drive effective change. Positive-sum cooperation between small groups of countries can accelerate the activation of tipping points in the global economy, facilitating decarbonization in all countries. Early opportunities for this are in the power and light road transport sectors, where clean technologies are increasingly competitive with fossil fuels. The value of decarbonization policies should be judged not just on their immediate effects on emissions within the implementing jurisdiction, but also for their potential to contribute to upward-scaling tipping cascades in the global economy.

ПАНДЕМИЯ НЕРАВЕНСТВА: НОВЫЕ ИЗМЕРЕНИЯ СОЦИАЛЬНОГО ДИСПАРИТЕТА В УСЛОВИЯХ КОРОНАКРИЗИСА

The article examines the problem of inequality in the context of the COVID-19 pandemic. The pandemic has significantly changed the usual criteria for assessing inequality, revealing the significant vulnerability of citizens living mainly in highly developed countries of the world. These countries have modern health care and welfare system with lower poverty levels than one in low-income developing countries. Based on the methodological approaches of the theory of social choice and the theory of economic welfare, the author shows the transformation of views on inequality and notes a decrease in economic factors of inequality with a significant increase in non-economic, subjective, behavioral factors. The article analyzes the relationship between the number of COVID-19 cases in different countries and indicators of economic growth, globalization, health security of citizens, and those characterizing people’s living standards. The author analyses data for individual countries and regions of the world.

An Energy-Saving Routing Integrated Economic Theory With Compressive Sensing to Extend the Lifespan of WSNs

A novel intercluster routing which simultaneously takes the energy efficiency in both intracluster and intercluster phases into account is proposed in this article, with the aim of extending the lifespan of the wireless sensor networks (WSNs). In the intracluster phase, the data are acquired based on the compressive sensing (CS) theory to cut down extra energy consumption resulted from spatial–temporal correlation. As for the intercluster phase, the economic welfare theory is applied to balance the energy depletion among different clusters. To this end, a novel concept of energy efficiency welfare ( $E^{2} W$ ) is proposed to promote energy equilibrium during the process of intercluster routing decision making. Subsequently, an energy-saving intercluster routing integrated economic theory with CS (EIREC) is presented and detailed. Finally, extensive experiments are designed and conducted to evaluate its energy efficiency. Comparisons with the existing clustering and CS-based strategies have verified its effectiveness in improving energy efficiency and extending network lifespan.

Spatial discounting of ecosystem services

The impact of conservation efforts targeted at preserving ecosystem services largely depend on the welfare implications associated with spatial variations in the provision of ecosystem services. While there is ample empirical evidence of spatial discounting or decay of the valuation of ecosystem services, there are still few underpinnings based on welfare economic theory. We establish a theory of spatial discounting that closely follows the concept of time discounting pertaining to climate change, and show spatial discount rates in the consumption, ecosystem service, and willingness to pay (WTP) numeraires. We consider the role of key parameters such as pure rate of spatial preference, consumption change, ecosystem services change, population density, and elasticity of marginal utility. We find that the spatial discount rate of WTP for ecosystem services that frequently appears in the empirical literature is the difference between the ecosystem service discount rate and consumption discount rate, where the ecosystem service discount rate includes both physical distance decay and welfare effects. Finally, we use numerical simulations to illustrate how the three different spatial discount rates vary with the spatial distance from the source of ecosystem services and with consumption patterns, implying many more possible spatial variations of WTP.

O conceito de bem-estar na teoria econômica convencional

Este trabalho analisa o conceito de bem-estar empregado pela teoria econômica do bem-estar. O objetivo principal é ressaltar que a definição de bem-estar, tanto aquela empregada pela economia tradicional, quanto pela moderna economia do bem-estar, fundamenta-se no comportamento racional e maximizador do indivíduo, que pouca relação possui com o comportamento real desse indivíduo na sociedade. As principais contribuições teóricas da economia do bem-estar são apresentadas, destacando as ideias utilitaristas e de Vilfredo Pareto. O refinamento conceitual realizado por Pareto não foi capaz de incorporar aspectos importantes que influenciam o comportamento do indivíduo. Ainda assim, seu argumento de otimalidade e eficiência econômica predomina no pensamento econômico ortodoxo e baliza muitas das políticas de bem-estar.

Research Review on Equity in Basic Medical Insurance

This study focuses on the equity of basic medical insurance. Through reviewing a large number of relevant literatures, the theoretical sources, measurement methods and empirical research on equity in basic medical insurance are summarized. The study found that scholars currently conduct research on the equity of basic medical insurance mainly from the two theories of welfare economics and social justice theory. Scholars generally use the concentration index, the level index, and the regression method to measure the equity of basic medical insurance. Many empirical studies have shown that basic medical insurance improves the level of health care and health on the one hand, but on the other hand it widens the fair gap between the insured and the non-insured. This paper concluded that the current equity of basic medical insurance still has certain limitations, and future research can progress toward related research. I hope this study can provide a reference for improving health and equity.

Nudging and Phishing: A Theory of Behavioral Welfare Economics

Nudges, which are interventions that do not restrict choice, have become widespread in policy applications. I develop a general and tractable framework to analyze the welfare implications of nudges. In this framework, individuals suffer from internalities (their utility when choosing is different from their welfare-determining utility) and choice and welfare depend on the environment, which can be altered by the nudge. I show that, in order to design the optimal nudge, no knowledge of environment-independent preferences is required. This means that the social planner does not need to fully recover individual preferences, something which is especially difficult in the presence of internalities. In heterogeneous populations, the optimal nudge trades off correcting the internalities of biased individuals with psychological costs imposed by the nudge on all individuals. When taxes are also available, nudging is generally optimal as long as the government is not fully efficient in collecting revenue from taxation. I also analyze phishing, when firms change the environment to take advantage of consumers’ internalities. Competition does not necessarily reduce phishing and, when firms have incentives to phish, competition can be welfare-decreasing. I analyze nudging and phishing in general equilibrium, and characterize the optimal nudge. In contrast to recent empirical work, which finds that nudging can backfire in general equilibrium because firms raise prices in response to a nudge, I show that under perfect competition nudging is generally welfare-enhancing.

Measuring Well-being: A Multidimensional Index Integrating Subjective Well-being and Preferences

Policymakers have begun looking for multidimensional alternatives to income-based measures for assessing well-being in societies. The Human Development Index (HDI) and related composite indices have been widely criticized in the welfare economic literature, yet are still some of the most influential income-alternatives in the research and policy arena. What are the theoretical links that bridge the gap between these composite indices and the criticisms levelled at them? This paper introduces the “preference index approach,” a multidimensional measure bringing together the “equivalence approach” and the “distance function” in welfare economic theory. It retains convenient similarities with HDI-type composite indices, but assesses well-being in a way that reflects interpersonal differences in preferences between dimensions of well-being, whilst retaining comparability of well-being levels between individuals. The approach is applied empirically with data from the British Household Panel Survey (BHPS) to estimate different preference types between well-being dimensions. The empirical application finds that preferences differ by age, education level and unemployment status, and finds a weaker preference for the health and income dimension within older groups. Across all groups, health is strongly prioritized over income. When preference heterogeneities are taken into account, the picture of well-being looks quite different than that painted by standard welfare measures.

The main stages of evolution of state economic policy

The basics of the state economic policy and its evolution in socio-historical progress in civilization process are analyzed; the author studies the approaches substantiated in their time by such famous thinkers likeNiccolo Machiavelli, ThomasHobbes, JohnLocke, GeorgHegel, KarlMarx, JohnRawls; liberal substantiations suggested byAdamSmith, DavidRicardo, JohnMaynardKeynes, Ludwig von Mises, MiltonFriedman,Friedrich von Hayek, R. Cokhane in their works; utilitarian theory of social welfareby Jeremy Bentham, arepresentative of classical political economical schoolJohnStuartMill didn't deny the possibility and eligibility of state's interference in the economic processes; the utilitarian theory of social welfare by Jeremy Bentham, who suggested pleasures and suffering analysis concept according to which it is expedient to redistribute the income between the rich and the poor to provide the best welfare in the society that influenced thespreading of marginalist revolutionideasand which has changed the methodological and theoretical basics of economic policy. Aconsiderable and significant contribution to the economic welfare theory developing(the theory of economic policy) was made by Vilfredo Pareto. With the help of the curvesof indifference Vilfredo Paretoanalyzed effective conditions of resources placing based on whichthe first theorem of welfare economy“Pareto optimum”– thecriterion of economic effectiveness was developed. The conceptions of state economic policy suggested by the representatives of monetarism, keynesianism, marxism, economic nationalism and others are analyzed. There is a great range of intermediate ways of economic policy implementation between alternative models being analyzed within which the state regulation is restricted to certain spheres

Challenges and Trends in Business Ethics Education: Mindmapping University Curriculunm for the Promotion of Justice and Sustainability for the Whole Society

The challenge of business ethics today is the problem of justice and sustainability. In the same time justice and sustainability have become the global trends in economic fora when people get together in academic seminars and other public discussions try to seek resolution about doing the right thing on the right place in the right time regarding economic crisis that we as society face in day to day experience. Increasing income inequality expands in size and scale that to some extent calls for the government intervention into markets on behalf of conditioning well-being of the whole society. On the one hand, there are challenges brought in societies by business that orient to price equilibrium when markets operate in the absence of external coercions such as reallocations, tax, and market operations. In order to be considered efficient market, business in the marketplace set aside the economic policy that favors the government intervention. On the other hand, there are trends in responding to the self-interest market by arguing ethically on values and principles of justice and sustainability in which economic policy that favors the government intervention is considered necessary. The aim of this paper is to shed lights to business ethics education in the school of economics and business to encapsulate the theory of economic welfare in its curriculum management and types of teaching through which young people are well-prepared to have good reasons in decision-making processes in dealing business in the marketplace. The requirement of good reasons is reflected in decision-making both as integrity and social responsibility. Decision-making that reflects integrity and social responsibility characterize the quality of ethical conducts. Therefore, business ethics education requires a theory that grounds economic welfare on the insight that economy is for the greater good of all human beings. This theory of economic welfare needs a reconstructive method to uncover the insight of justice and sustainability.