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Scitovsky Reversals and Practical Benefit-Cost Analysis
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Richard E. Just
Veröffentlicht/Copyright:
8. Mai 2012
The possibility of preference reversals according to the Kaldor-Hicks (KH) criterion in benefit-cost analysis has concerned economists since Scitovsky (1941) first published his results. Lawyers and philosophers have argued that the potential of reversals calls the use of benefit-cost analysis into question, implying elimination of its use. We demonstrate that reversals occur only with inferior goods in the case of static production possibilities and that reversals occur under changing production possibilities only when production possibilities frontiers cross, which is a myopic characterization that ignores practical cases of global production possibilities.
Keywords: Scitovsky; inferior goods; crossing production possibility frontiers; benefit-cost analysis
Published Online: 2012-5-8
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Measuring The Social Opportunity Cost of Labor In Mexico
- The Normative Implications of Political Decision-Making for Benefit-Cost Analysis
- Scitovsky Reversals and Practical Benefit-Cost Analysis
- Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia
- Principles and Standards
- Developing General Equilibrium Benefit Analyses for Social Programs: An Introduction and Example
Schlagwörter für diesen Artikel
Scitovsky;
inferior goods;
crossing production possibility frontiers;
benefit-cost analysis
Artikel in diesem Heft
- Article
- Measuring The Social Opportunity Cost of Labor In Mexico
- The Normative Implications of Political Decision-Making for Benefit-Cost Analysis
- Scitovsky Reversals and Practical Benefit-Cost Analysis
- Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia
- Principles and Standards
- Developing General Equilibrium Benefit Analyses for Social Programs: An Introduction and Example
