Equity and efficiency when needs differ
Abstract
There is no consensus on how to measure social welfare and inequality when households have different needs. As we show, a dilemma emerges between holding households responsible for their needs or compensating them. This dilemma is of first-order importance for social welfare, but generally plays a minor role in the measurement of inequality. To address this impasse, we introduce partial compensation. Our axiomatic characterizations reveal novel families of welfare criteria and, with the extension to multidimensional commodity spaces, provide ready-to-use criteria for the analysis of redistributive policies.
Fields of Study & Subjects
Economic
financial
and policy analysis
Publication details
- Journal / source
- Journal of Public Economics
- Publisher
- Elsevier BV
- Volume
- 260
- Pages
- 105704–105704
- Publication date
- 26 June 2026
- Language
- EN