Economics Dictionary of ArgumentsHome
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| Kaldor-Hicks Criterion: The Kaldor-Hicks criterion is an economic efficiency standard that states that a political or economic change is considered an improvement if the beneficiaries could theoretically compensate the aggrieved and still retain some of the benefits. It does not require that compensation actually be paid, as the focus is on potential welfare gains rather than actual redistribution. See also Efficiency, Pareto optimum, Difference principle, Inequalities.
_____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Richard O. Zerbe on Kaldor-Hicks Criterion - Dictionary of Arguments
Parisi I 360 Kaldor-Hicks criterion /Zerbe: Kaldor–Hicks is the standard for BCA ((s) Benefit-costs analysis). It arose during the late 1930s out of discussions among prominent British economists about repealing the Corn Laws (Kaldor, 1939(1); Harrod, 1938(2); Robbins, 1938(3); Hicks, 1939(4)). >Cost-benefit analysis. Before that time it was generally assumed that each individual had an “equal capacity for enjoyment,” and that gains and losses among different individuals could be directly compared.7 By 1939, however, leading British economists, including the future Nobel Prize winner Sir John Hicks, were raising questions about such policy prescriptions because they involved interpersonal comparisons of utility (Hicks, 1939)(4). Kaldor provided a solution: he acknowledged the inability of economists to establish a scientific basis for making interpersonal comparisons of utility but suggested that this difficulty could be made irrelevant (Kaldor, 1939)(1). He argued that policies that led to an increase in aggregate real income are always desirable because the potential exists to make everyone better off (…). 1. Kaldor, Nicholas (1939). “Welfare Propositions of Economics and Interpersonal Comparisons of Utility.” Economic Journal 49: 549. 2. Harrod, Roy F. (1938). “Scope and Method of Economics.” Economic Journal 48: 383. 3. Robbins, Lionel (1938). “Interpersonal Comparisons of Utility: A Comment.” Economic Journal 48: 635. 4. Hicks, John R. (1939). “The Foundations of Welfare Economics.” Economic Journal 49: 696. Richard O. Zerbe. “Cost-Benefit Analysis in Legal Decision-making.” In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Zerbe, Richard O. Parisi I Francesco Parisi (Ed) The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017 |
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