My dear colleague Nyiwul Mabughi of Gettysburg College and myself are working on a proposed welfare formulation which we would like to be applied to developing country data.
We propose a multi-dimensional cardinal social welfare function. It is not a comprehensive set of all possible socio-economic dimensions, but rather intends to grasp the most critical socio-economic factors leading to social welfare. We also try to include variables which have readily available data on a country scale. Furthermore, the proposed function is static and not dynamic. We also adhere to the strict definition of social welfare as the total well-being of the society or community at large, rather than the quality of life of an individual citizen living in that society. Thus, we take the approach of Pearce (1992), Moulin (2004), Krabbe (1989), and Tresch (2015), in contrast to the traditional utilitarian views of Harsanyi (1987), Samuelson (1983), and I.M.D. Little (1957).
Given the above, we see this research as an attempt or initial proposition towards social welfare which is not exhaustive nor intended to be so. Nonetheless, we attempt a cardinal measure of social welfare encompassing critical dimensions of collective human welfare, rather than individually separable utilities.
The following factors are principally taken into consideration:
(1). Per capita income (adjusted values based on purchasing power parity, and using Atkinson’s diminishing social utility of wealth concept)
(2). Poverty (poverty incidence, poverty depth, and expenditures needed to eradicate poverty)
(3). Income inequality (Gini index)
(4). Clean water (as a social entitlement)
(5). Access to health services (as a social entitlement)
(6). Education attainment (human development)
(7). Life expectancy (livelihood aspect of human welfare)
(8). Gender equality (social equity and cohesion).
Indirect factors which may cause, or be caused by social welfare, are not directly included in the social welfare formulation. However, causality of social welfare to those factors can be addressed as separate data sets. For example, the World Economic Forum’s Global Competitiveness Index which basically measures a country’s aggregate productivity, can be viewed as a consequence to social welfare, or be caused by it. Similarly speaking, other indicators related to climate change, innovation, openness index, and the World Bank’s Doing Business index, all can be addressed using the same logic. Moreover, it must be mentioned that the approach taken in this research is a strict socio-economic formulation, rather than a political-cultural context of social welfare. Hence, political freedom, legal independence, and other related aspects are not directly incorporated into our formulation.
An aggregate social welfare function is proposed mathematically and we apply the six axioms of social welfare on it. In addition, we apply it to most developing countries in which data is available.
The results are very interested, although not yet finalized.
If anyone has further thoughts, comments, and suggestions: you are most welcome to post them.
Tarek H. Selim (World Economic Forum and American University in Cairo)
Nyiwul Mabughi (Gettysburg College)