Bentham or Nash? On the acceptable form of social welfare functions

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Abstract

The acceptability of the Nash Social Welfare Function is questioned because a minute (perhaps hardy perceivable) welfare change of someone with a very low welfare level might overwhelm enormous welfare changes of others. The axiomatic derivation of the Nash SWF by Kaneko and Nakamura is analyzed. Arguments for and against social welfare as separable in, linear in, and an unweighted sum of individual welfares are critically discussed. Separability follows from the individualistic ethics (Fleming, Sugden and Weale). Linearity follows from the ‘logic’ of rational choice in the face of risk (Harsanyi). (Diamond's counter‐example is rejected.) Unweighted sum follows from either (i) informational restriction precluding interpersonal comparison of welfare levels (D'Aspremont and Gevers, Maskin); or (ii) with finite sensibility, equation of just‐perceivable increments of welfare across persons (Edgeworth) or the Weak Majority Preference Criterion (Ng).

Original languageEnglish
Pages (from-to)238-250
Number of pages13
JournalEconomic Record
Volume57
Issue number3
DOIs
Publication statusPublished - Sep 1981

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