In this book the author analyzes measures of consumer well-being. The three main, neoclassical measures of well-being are the compensating variation, the equivalent variation, and consumer’s surplus. The question is which of the measures of consumer well-being is the best. This book tackles the question, with a surprising outcome that is contrary to the main opinion in the literature. Prof ten Raa presents a test that measures must pass to track utility. The test will be used to sort measures in the remainder of the book. It will culminate in a variant of consumer’s surplus, which he calls the consumer’s index, and a generalization that applies to nonhomothetic demands. Variants of the consumer’s index are presented, including ones that are applicable to demand functions with income effects, even nonlinear ones. So-called broad measures of consumer well-being, such as the Human Development Index, will be encompassed.

Contents:

• Introduction


• The Theory of the Consumer in Microeconomics


• Hicksian Measures: Equivalent and Compensating Variations


• Marshallian Measure: Consumer’s Surplus


• Constant Elasticity of Substitution Functions


• Utility Tracking Measures of Well-being


• Price Indices


• The Consumer’s Index: Theory


• The Consumer’s Index: Applications and Extensions


• Conclusion


• Appendix: Human Development Index and Its Components

Readership: For researchers and graduate students who are interested to understand more about measures of consumer’s well-being.

Key Features:

• This book presents a critical review of measures of consumer economic well-being


• The book demonstrates clearly that a variant of consumer’s surplus is superior


• It includes coverage of broad measures of consumer well-being