Money Metric Measures of Individual and Social Welfare Allowing for Environmental Externalities

Even with environmental externalities, money metric measures of individual welfare can often be constructed by methods similar to those of Vartia (1983), provided that individual’s willingness to pay functions are known. Satisfactory money metric measures of social welfare are harder, however. Following Feldstein (1974) and Rosen (1976), a “uniform ” money metric measure is proposed, based on the uniform poll subsidy (or tax) to all individuals which produces the same gain (or loss) in social welfare. Finally, problems with the definition of such measures when faced with “environmental catastrophe ” are discussed. Acknowledgement

Can Weak Substitution be Rehabilitated?

Revealed preference, Non-market valuation, Weak substitution, Q51,