Economic viewpoints on ecosystem services
Silvis, H.J. ; Heide, C.M. van der - \ 2013
Wageningen : WOT Natuur & Milieu, Wageningen UR (WOt-rapport 123) - 68
ecosysteemdiensten - economische theorie - economie van natuurlijke hulpbronnen - milieueconomie - ecologie - welvaartseconomie - kosten-batenanalyse - ecosystem services - economic theory - natural resource economics - environmental economics - ecology - welfare economics - cost benefit analysis
to help determine the different values of ecosystems. Ecosystem services are usually divided into four categories: provisioning services, regulating services, cultural services and habitat services (previously denoted as supporting services). This overview highlights economic theories about ecosystem services, distinguishing between pre-classical economics, classical economics, neoclassical economics and modern economics. In addition, specific attention is given to two special branches of economics: (i) natural resource and environmental economics and (ii) ecological economics. Natural resource and environmental economics basically deals with a welfare economics analysis of natural resource and environmental issues, such as pollution control, natural (i.e. renewable and non-renewable) resource exploitation, and global environmental problems such as climate change. The more recent discipline of ecological economics was launched as a new paradigm with closer ties to the natural sciences. Whereas environmental economics focuses on value dimensions (i.e., utility and welfare in theory, and costs and benefits in practice), ecological economics – as a heterodox, non-coherent school of economics – is inclined to add ecological criteria to these dimensions, to cover aspects such as productivity, stability and resilience of ecosystems. Since a proper pricing system for many ecosystem services simply does not exist, various non-market valuation techniques have been developed to elicit the value of these services. Monetary valuation of ecosystem services remains problematic however, for one thing because of the hidden value of the ecosystem structure that supports the different ecosystem services (the ‘glue value’). Finally, the issue of policy analysis and design is addressed. The rationale for regulation with regard to nature and ecosystem services is that adverse risks, such as overexploitation, are not adequately priced in markets. Welfare economics tools for evaluating policies and projects include cost-benefit analysis and cost-effectiveness analysis. From an ecological economics standpoint, multicriteria analysis, the precautionary principle and the method of safe minimum standards are topical issues. The latter two policy tools suggest that we should err on the side of caution in the face of ecological uncertainty. The advancement of knowledge in this field requires further interdisciplinary cooperation between the natural and social sciences. Key words: ecosystem services, history of economic thought, welfare theory, market failures, policy failures, economic valuation, cost-benefit analysis, cost-effectiveness analysis, multicriteria analysis, precautionary principle, safe minimum standards
Outcome van NMa-optreden: Een beschrijving van de berekeningsmethode
Kemp, R.G.M. ; Mulder, M. ; Sinderen, J. - \ 2010
Den Haag : Nederlandse Mededingingsautoriteit (NMa working papers no. 1) - 55
marktregulaties - prijsbewaking - marktconcurrentie - welvaartseconomie - bescherming van de consument - berekening - market regulations - price controls - market competition - welfare economics - consumer protection - calculation
Sinds een aantal jaren bericht de NMa in haar jaarverslag over de welvaartseffecten van haar optreden. Deze jaarlijkse rapportages concentreren zich op de geschatte welvaartswinsten voor consumenten/afnemers, aangeduid als de Outcome van het handelen van de NMa. De Outcome wordt berekend als het 3-jaars voortschrijdend gemiddelde van de eerstejaarseffecten van de NMa-ingrepen. In dit rapport wordt de wijze waarop de Outcome wordt bepaald gepresenteerd. De methode voorde bepaling van de Outcome bestaat er uit dat op een relatief eenvoudige wijze het effect van NMa activiteiten op het consumentensurplus wordt geschat.
Environmental degradation and intra-household welfare: the case of the Tanzanian rural South Pare Highlands
Dimoso, R.L. - \ 2009
Wageningen University. Promotor(en): Gerrit Antonides. - [S.l. : S.n. - ISBN 9789085852889 - 182
milieuafbraak - allocatie van arbeid - welvaartseconomie - huishoudonderzoeken - huishoudens - platteland - landbouwhuishoudens - natuurlijke hulpbronnen - man-vrouwrelaties - vrouwen - tanzania - gedrag van huishoudens - environmental degradation - labour allocation - welfare economics - household surveys - households - rural areas - agricultural households - natural resources - gender relations - women - tanzania - household behaviour
Key words: Environmental degradation, intrahousehold labour allocation, intrahousehold welfare.
Rural south Pare highlands in Tanzania experience a deteriorating environmental situation. Of particular importance is the disappearance of forests and woodlands. The consequence are declining amounts and reliability of rainfall, declining amounts of water levels and loss of biodiversity. Deterioration of environmental resources increases costs of collecting environmental products, which in many respects have no feasible close substitutes. One of the major components of the increased costs is labour time allocated by household members to collecting environmental products and/or grazing activities.
This study presents an empirical investigation of the impact of this reallocation of intra-household labour resources on livelihood for different members of a household. We used the cross-sectional data. To analyse how variations in the environmental degradation affect intra-household labour allocation, three types of areas are distinguished: severely-degraded, medium-degraded, and non-degraded environments.
Our findings show that (1) the environmental products collection and/or grazing activities are gender biased with husbands specializing in grazing while wives and children working mainly on fetching water and fuel wood; and that the labour time allocation is significantly influenced by environmental condition; (2) environmental degradation is limiting the production and consumption potentials in the area and that a limited adoption of agricultural modernization further aggravates this problem; (3) factors like school crowdedness, illness, bad weather, poor school quality, and school absenteeism due to street vending contribute much negatively to the probability of primary school attainment for a child apart from the environmental degradation situation; and that (4) subjective welfare and well-being of the household members are affected by the quality of the environment.
This study contributes to the understanding of the situation and setting proper measures towards solving the problems of sustainable development, poverty alleviation, environmental policy, human capital formation in south Pare.
|Boeren in Nederland. Geschiedenis van de landbouw 1500-2000
Bieleman, J. - \ 2008
Amsterdam : Boom - ISBN 9789085065401 - 671
landbouw - tuinbouw - akkerbouw - landbouw bedrijven - gemengde landbouw - zandgronden - lössgronden - melkveebedrijven - platteland - urbanisatie - welvaartseconomie - nederland - geschiedenis - landbouw als bedrijfstak - welvaartsstaat - agrarische geschiedenis - agriculture - horticulture - arable farming - farming - mixed farming - sandy soils - loess soils - dairy farms - rural areas - urbanization - welfare economics - netherlands - history - agriculture as branch of economy - welfare state - agricultural history
In Boeren in Nederland beschrijft landbouwhistoricus Jan Bieleman hoe een land van steden en industrieën toch bij uitstek een landbouwnatie is gebleven. Bieleman legt een glashelder verband tussen de verstedelijking, de groeiende welvaart en de landbouw, die daar telkens weer adequaat op wist in te spelen. Boeren in Nederland. De geschiedenis van de landbouw 1500-2000 is een sterk uitgebreide en geactualiseerde bewerking van Bielemans Geschiedenis van de landbouw in Nederland 1500-1950, dat sinds zijn verschijnen een standaardwerk is
Welfare and distribution effects of water pricing policies
Ruijs, A.J.W. - \ 2007
Milano : Fondazione Eni Enrico Mattei (Working Papers / Fondazione Eni Enrico Mattei paper 151) - 22
prijsbeleid - prijzen - drinkwater - water - waterbeschikbaarheid - watertarieven - inkomensverdeling - bevolkingsgroepen met een laag inkomen - welvaartseconomie - economische analyse - sao paulo - brazilië - prijsbepalende factoren - price policy - prices - drinking water - water - water availability - water costs - income distribution - low income groups - welfare economics - economic analysis - sao paulo - brazil - price determining factors
In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to analyze welfare and distribution effects of changing water prices in the Metropolitan Region of Sao Paulo. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.
|Tim Lang en Michael Heasman: Oorlog in voedselland
Dagevos, H. - \ 2004
Voedingsmiddelentechnologie 37 (2004). - ISSN 0042-7934 - p. 10 - 11.
voedselconsumptie - obesitas - voedselproductie - welvaartseconomie - voedselbiotechnologie - volksgezondheid - milieu - globalisering - voedselindustrie - food consumption - obesity - food production - welfare economics - food biotechnology - public health - environment - globalization - food industry
De hedendaagse voedingswereld staat op barsten. Overheersende productiepraktijken en consumptiepatronen hebben hun onschuld verloren. Ze trekken een te zware wissel op de gezondheid van mens en milieu. Verandering is op komst. Het boek 'Food Wars' biedt twee uitwegen om in de nabije toekomst aan een apocalyps te ontsnappen
Biotechnology boosts to crop productivity in China: trade and welfare implications
Huang, J. - \ 2002
Den Haag : LEI - ISBN 9789052427669 - 40
agrarische economie - biotechnologie - genetische modificatie - voedselgewassen - voedselproductie - handel - welvaartseconomie - economische ontwikkeling - china - agricultural economics - biotechnology - genetic engineering - food crops - food production - trade - welfare economics - economic development - china
Economic welfare analysis of simulated control strategies for Classical Swine Fever epidemics
Mangen, M.J.J. - \ 2002
Wageningen University. Promotor(en): A.A. Dijkhuizen; M. Nielen; A.M. Burrell. - S.l. : S.n. - ISBN 9789058086211 - 186
varkens - classical swine fever virus - varkenspest - ziekteoverdracht - ziektebestrijding - epidemiologie - vaccinatie - welvaartseconomie - kosten - verliezen - consumentengedrag - simulatiemodellen - economie - nederland - pigs - classical swine fever virus - swine fever - disease transmission - disease control - epidemiology - vaccination - welfare economics - costs - losses - consumer behaviour - simulation models - economics - netherlands
Keywords: Classical swine fever; contagious disease; epidemiological model; sector-level market and trade model; simulation; economic welfare analysis; densely and sparsely populated areas; supplementary animal welfare measures; the Netherlands.
A sector-level and trade market model and a generic, spatial, temporal and stochastic epidemiological model are used to simulate the epidemiological and economic effects of different measures to control classical swine fever (CSF) epidemics in different regions in the Netherlands. The control measures include the current EU legislation (stamping-out infected herds; tracing contact herds and installing quarantine zones), preventive slaughtering or an emergency vaccination strategy with delayed destruction and intra-community trade as additional control measures. In addition, the effects of supplementary animal welfare measures to interrupt piglet production during a CSF epidemic are analysed. Different trade scenarios are simulated: a partial trade ban for the quarantine zones only or a total export ban on all Dutch live pigs. Aggregating the welfare changes of the different stakeholders (pig producers, consumers and government) provides results on the net welfare effect for the Dutch economy.
Economic and epidemiological results suggest that measures to control CSF epidemics should be dependent on geographical circumstances. In a sparsely populated pig area, the measures defined by EU legislation are appropriate, whereas in a densely populated area additional control measures, e.g. emergency vaccination and/or preventive slaughter, are needed. The current political climate favours preventive slaughter for the Dutch situation. Furthermore, the option of supplementary animal welfare measures to interrupt piglet production during the epidemic is rejected on economic grounds. Results indicate that rendering capacities should be reserved for carcasses from infected and preventively slaughtered farms, and used to destroy pig carcasses slaughtered for animal welfare reasons only if capacity permits.
|The economics of nature : managing biological assets
Kooten, G.C. van; Bulte, E.H. - \ 2000
Malden, Mass. [etc.] : Blackwell Publishers - ISBN 9780631218944 - 512
natuurlijke hulpbronnen - hulpbronnenbeheer - economie - investering - kapitaal - milieubeheer - welvaartseconomie - taxatie - duurzaamheid (sustainability) - natuurbescherming - bedreigde soorten - biodiversiteit - bosbedrijfsvoering - ontbossing - natural resources - resource management - economics - investment - capital - environmental management - welfare economics - valuation - sustainability - nature conservation - endangered species - biodiversity - forest management - deforestation
The Economics of Nature Management takes a portfolio management perspective on the worldwide deterioration of the natural environment. For many emerging countries, nature conservation boils down to the purely economic decision of "investing" limited funds in nature potentially at the expense of investing in other necessary imperatives such as education or infrastructure. As a result, the authors see the function of the book as twofold. First, to measure environmental services and biological assets and second it demonstrates how it applies the economic theory of nature management through case studies.
Welfare inequality, regionalisation, and welfare policy : measurement and analysis for Spain
Quadrado, L. - \ 1999
Agricultural University. Promotor(en): H. Folmer; W.J.M. Heijman. - S.l. : S.n. - ISBN 9789058081636 - 305
sociaal welzijn - gezondheid - onderwijs - armoede - inkomensverdeling - regio's - welvaartseconomie - overheidsbeleid - spanje - europese unie - welvaartsstaat - social welfare - health - education - poverty - income distribution - regions - welfare economics - government policy - spain - european union - welfare state
This study is focused on the changes in regional inequality in Spain over the last four decades, with emphasis on regional welfare. The two most important items of welfare in Spain are, health and education, and so these are the main focus of this study. Attention is paid to the levels and trends in inter and intra-regional disparities in the welfare components of health, education and housing. The extent to which changes in inequality with respect to welfare relate to changes in regional welfare policy is evaluated. Various methodological issues are explored in the context of measuring welfare inequality between regions. A specific procedure to measure inequality in longitudinal analyses is developed. The study is organised in three parts. The first part includes Chapter 2 and 3, and deals with regional structure and policy to provide a foundation for the analysis. The second part focuses on the methodology developed in this study and the techniques used for that purpose (Chapter 4). The third part includes all the results of the analysis (Chapter 5, 6, and 7) and the conclusion chapter (Chapter 8).
Chapter 2 focuses on the development of the Spanish welfare state and its socio-economic context. A substantial part of the policy changes relating to the welfare system in Spain have resulted from the redefinition of the government's duties following the 1978 Constitution. Since the sixties the Spanish economy has been unstable and there have been important developments such as, the population explosion, and the ageing of the population. This situation has resulted in the need for significant changes in the welfare state as seen in a variety of policy changes.
The devolution of power to the regions and the regionalisation process of the welfare state in particular are of major interest in the present study. The regional state in Spain, known as Co munidades Autónomas, is a decentralised policy model composed of any of the nineteen Autonomies or admisnistrative regions consisting of one or several provinces (from a total of fifty two). The development of the welfare state in Spain has involved increased autonomy for the regions in welfare issues. The nineteen regions are responsible for welfare programs relating to basic infrastructure (ports, road networks, etc). But only seven out of the nineteen Spanish regions have gained full autonomy in education and health (the largest expenditure items of the welfare state). So the regionalisation process has not been symmetric among all regions. This situation may have some implications for the inequality between regions. The impact on inequality of the regionalisation of the welfare state is therefore one of the important issue investigated in the present study. In the coming years, regions with high levels of autonomy are likely to contribute greatly to policy making since they will be responsible for modelling the structure of the welfare state.
In Chapter 3, the regional policy of the European Union, and the Spanish regional policy is described in detail. Spain is today one of the leading beneficiaries of the EU's financial assistance for regional development known as the Structural Funds . The relevance of the European Union (EU) regional policy in mitigating existing disparities between regions is discussed. The rapid development of mechanisms for the regional support of (economically) weak regions has contributed to a reduction of inequality. The Compensation Funds which started in 1978 have played an important role in the regions although the Structural Funds remain more important.
In Part II we discuss the selection of a measure of inequality for our study. The Theil's Second measure for multidimensional inequality is selected (Chapter 4). A specific procedure is developed to estimate this measure for longitudinal analyses. We use several indicators to represent each of the welfare components under consideration. This involves defining a composite index of indicators. Inequality in regional welfare is investigated focusing on the following welfare components: health facilities and health status, education facilities and education enrollment and finally, household expenditures and housing conditions. The underlying multidimensionality of the welfare components is thus taken into account. In the present study, Maasoumi's (1986) aggregator function is used to aggregate the indicators. This function enables us to reproduce the maximum amount of information contained in the original indicators. The data used relates to the following years (or periods): 1964, 1974, 1981, and 1991. There are also no studies that have done a longitudinal analysis of welfare inequality. Regional disparities in Spain over time with respect to health and/or education facilities have not been analyzed using an inequality measure. Thus it is not possible to compare inequality results from other literature sources with our results.
For empirical purposes the use of Maasoumi's function requires weights associated with the indicators. Different weights are used for the different indicators. The estimation procedure for these weights developed in the present study is based on the Partial Common Principal Component model (PCPC) whenever appropriate or Principal Component Analysis (PCA) otherwise. The weights attached to the indicators are the component coefficients of the first component obtained using PCPC (or PCA). PCA has been applied for longitudinal analysis using Theil's second measure for multidimensional inequality (Maasoumi and Jeong, 1985;, Maasoumi and Nickelsburg, 1988; Zandvakili, 1992, 1999). When the periods under consideration share the same first component, the composite index is obtained on the basis of the component coefficients computed using a partial common principal component model. So the component coefficients are not sample-specific because they are the same in all the periods. In other words, the composite indexes for these periods depend on the values of the variables rather than the weights attached to variables. If the hypothesis of one partial common component is not rejected for a number of periods (for first three, and then two periods in this study), the composite index is then constructed on the basis of the maximum likelihood estimates for these periods together with the individual component coefficients for the remaining periods. When a partial principal component model does not fit the data, the composite index is based on individually computed component coefficients. Finally, the overall inequality of the Theil's second measure is computed.
The Theil's second measure is applied in the present study to achieve the following objectives. First, the magnitude and direction of overall inequality , between-regioninequality , and within-region inequality is computed with respect to each of the welfare components under study. The wide variations in the geographic and socio-economic structure of the Spanish regions require an in-depth analysis of inequality focusing on intra- and inter-region disparities. In addition, the estimates of the composite indexes for the geographical units (regions) have been used for a statistical cluster analysis which identifies the similarities between one group of regions in contrast with another group of (similar) regions. The cluster analysis identifies two groups of high similar values ( most-favored regions ) and low similar values ( least-favored regions ). A picture of the geographical distribution of welfare components is obtained, and changes over time are compared. The inequality results and the results from the cluster analysis form the main findings of our study.
The empirical results with respect to the welfare components are presented in Part III. Health facilities and health status are studied separately (Chapter 5). A substantial part of Chapter 5 is focused on health facilities. The inclusion of geographical effects ( spatialspillovers ) resulting from the contiguity (or geographical proximity) between geographical units forms the major contribution of this study. Spatial spillovers across geographical areas are inevitable since individuals can commute from their own area to contiguous areas when health facilities are not available in the home area. A procedure is developed to incorporate contiguity into the analysis. The geographical units considered for contiguity are provinces which are the smaller territorial divisions of regions.
In the method developed for incorporating contiguity, the level of facilities available in a certain province is considered to consist of the facilities in the own province plus the facilities located in contiguous provinces weighted by spatial weights . Spatial weights used here correspond to the simple inverse distance (optimal distance by road) between the provincial capital of the Spanish provinces and the provincial capital in contiguous provinces. For health facilities and health status the notion of contiguous provinces refers to first-order contiguous provinces connected at the first order of contiguity . The first order of contiguity describes two provinces that have a common boundary, common vertex or both. The use of this order of contiguity is justified as patients seek a first contact with doctors or specialized treatment and diagnosis at the nearest place to their home province.
The results show improvements in inequality with respect to health facilities are between 1981 and 1991. The sharp drop in inequality coincides with the enactment of the 1986 Health act (LGS). In addition there is also an important decline in the components of between-region inequality between 1981 and 1991. It is possible that regional policies and the devolution of power in health issues in the mid-eighties may have caused changes in the pattern of regional inequality.
The regionalisation process of the health system may also have had important implications for regions with transferred powers in health issues. In these regions the results reveal that within-region inequality decreases between 1981 and 1991. So it is possible that the regional policies have resulted in a more uniform distribution of health facilities within certain regions. The geographical distribution of facilities obtained using cluster analysis reveals a North-South pattern with facilities located mostly in the North of Spain. The group of most-favoured regions consists of regions with transferred powers, regions which are central places like Madrid, and regions with certain socio-economic characteristics. It is suggested, therefore, that the geographical distribution of facilities may be affected by the socio-economic conditions of regions.
The comparison of the contiguity and non-contiguity cases reveals that there are important spatial effects, especially among the regions situated in the North and the Centre of the Iberian Peninsula. Geographical proximity benefits only a few number of regions resulting in a dramatic increase in inequality in the contiguity case. When contiguity is not taken into account, the results for inequality show a very different impact for health policies. Inequality with respect to health status is investigated, but the results obtained are not very satisfactory possibly because of inaccuracies in the data used.
Education facilities and education enrollment are studied in Chapter 6. With respect to education facilities, spatial spillovers are also incorporated since education is one of the most common causes of individuals commuting. But contiguity is not often taken into account in the literature on education. For computing available facilities in secondary education, the first order of contiguity is considered. The available facilities for university education consist of facilities located in contiguous provinces at the first order of contiguity plus the second order of contiguity, (plus the facilities in Madrid and Barcelona for 1964 and 1974). Here a second order of contiguity is defined as between two contiguous provinces, one of them being first-order contiguous (facilities in provinces adjacent to the neighbouring province).
The results for inequality with respect to education facilities show that inequality has declined between 1974 and 1991. This may be due to the promotion of non-compulsory education. Over the last few decades the Spanish government has pursued a policy intended to distribute university and vocational training facilities more evenly. The increase in the contribution to inequality of between-region inequality between 1981 and 1991 may be due to the impact of regional policies.
Intra-regional disparities are more important in Castilla León, Castilla la Mancha, and Andalucía. All these regions are bound by similar regional characteristics such as limited industry, abundant potential in natural resources, predominance of agriculture and their geographical situation in the Centre and South of the Iberian Peninsula. In addition, these three regions cover 53% of the Iberian Peninsula and 52% of the total land size. Regional authorities in Andalucía are responsible for education powers while there has been no devolution of power in Castilla León and Castilla la Mancha. The socio-economic characteristics of these regions appear to be more influential with respect to inequality than autonomy. The geographical distribution of facilities with respect to education has changed dramatically between the 60s and the 90s. This result from cluster analysis shows that changes in education policies have affected inequality.
Spillover effects have improved the education facilities in the Spanish regions resulting in smaller values of overall inequality in the contiguity case compared to the non-contiguity. Spatial spillovers are observed in the Centre of Spain in 1991 between the region of Aragón and its first or second order neighbours (Madrid, Cataluña and Navarra). Further, the trends in inequality in the contiguity case are more in line with the policy measures than results in the non-contiguity case. So the inclusion of spillovers in the contiguity case seems to be a good approach for the study of inequality.
Education enrollment in the non-compulsory education is also investigated in Chapter 6. The results for overall inequality and the inequality decomposition with respect to enrollment are very similar to those for education facilities. The results suggest that education facilities and education enrollment have been influenced by policy measures and the regionalisation process.
Trends in inequality with respect to household consumption and housing conditions are analysed in Chapter 7. The results suggest that the magnitudes, and the trends for inequality that might be expected with respect to household incomes are similar to those obtained with respect to household expenditures. Inequality in household consumption and housing conditions has narrowed significantly over the last four decades. This is consistent with the changes in the economic situation which occurred during this period.
Finally, Chapter 8 summarises and discusses the main conclusions based on the findings in this study. One of the main conclusions is that the procedure that we develop for the longitudinal analysis of multidimensional inequality in the welfare components is successful and performs satisfactory. In addition, spatial spillovers must be taken into account by using the procedure developed for incorporating contiguity. When contiguity is considered a more accurate picture of inequality is obtained. With respect to the empirical findings in this study, we conclude that firstly, the setting up of the welfare system and the social policies undertaken over the last few decades in education and health have had important consequences for inequality. Secondly, the impact of the regionalisation process on inequality with respect to education and health also appears to be important. New insights with respect to the relationship between welfare policies and the actual changes in welfare inequality may be provided by extending the present analysis.
The consumer in Austrian economics and the Austrian perspective on consumer policy
Leen, A.R. - \ 1999
Agricultural University. Promotor(en): H. Folmer; W.J.M. Heijman. - S.l. : S.n. - ISBN 9789058081025 - 223
economie - economische theorie - methodologie - economische analyse - welvaartseconomie - neo-klassieke economie - markteconomie - marktconcurrentie - consumenten - beleid - overheidsbeleid - kapitalisme - productaansprakelijkheid - economics - economic theory - methodology - economic analysis - welfare economics - neoclassical economics - market economics - market competition - consumers - policy - government policy - capitalism - product liability
In this thesis I examined the place of the competitive-entrepreneurial consumer in Austrian economic thought. For a neoclassical economist, competition among consumers is hard to find. For an Austrian economist, however, it is a necessity. The introduction puts forward the problem that although an Austrian economist believes that everyone -the consumer included- acts entrepreneurially, in his elucidation of the market process he gives the role of entrepreneur to the producer only.
In Part I, "The Consumer in Austrian Economics" I looked at the questions (1) What is Austrian economics? (2) What is the Austrian methodology? and (3) What about the consumer in Austrian economics? The first chapter explains the name Austrian. Although it indeed began in Austria, today it has nothing to do with that country. The term Austrian means a way of looking at the subject and the method of economic science. The perfectly-competitive model of mainstream economics is replaced by the notion of the entrepreneurial-competitive market process. The second chapter looks at the method of Austrian economics: praxeology. It is the verbal elaboration of the logical implication that men act. The title of Mises's book "Human Action" sums it up. Purposes direct all conscious human action. Every human act exchanges something possessed for something preferred. All human action attempts to change the future. The chapter examines what this means for the Austrian perspective on some basic economic notions of human action and non-action (valuation and indifference curves), and economic laws (the law of decreasing returns). Economists use their minds to deduce conclusions; experience in human action is history and only history. There is a sharp difference between Austrian and mainstream neoclassical economics; the latter is often mathematically moulded and econometrically tested, the former never.
Chapter Three looks at the reason why the consumer is missing from Austrian economics. By emphasizing the importance of (often hidden) dispersed knowledge and the feasibility of the producer being able to calculate -as against a government's ability to calculate and collect all the necessary data- the consumer got lost. This all took place in the so-called socialist-calculation debate that raged between the two world wars. The consumer was never to be found again in Austrian economics. He is absent in the elucidation of the market as a dynamic process of entrepreneurial discovery, as well as, in the analysis of the possibility of economic calculation in monetary terms. The latter is discussed only in terms of production, and in the former modern Austrian economics uses the methodological makeshift of an entrepreneurial producer and a non-entrepreneurial consumer. Just like the classical economists before them, the Austrians neglect the rationality of the consumer.
In Part II, "The Consumer: Entrepreneurial and Calculative", I examined the question "What does the calculative and entrepreneurial consumer look like?" I have attempted to recompose market phenomena in terms of the typical components of everyday decision making. This is done for the ordinary businessman, as well as for the average consumer. Chapter Four discusses a lesser-known theme of the Austrians. Menger in his Grundzätze , gave four characteristics of goods as answer to the question of what makes something a good. Böhm-Bawerk in his Rechte und Verhältnisse added a fifth: individuals should also know how to use a thing. I used this fifth characteristic to throw light on the consumer: his form of alertness and entrepreneurship inside the market process. With the help of Ryle, I looked at a notion of alertness that suits the producer and at one that suits the consumer. Alertness is a form of knowing-how that can be differentiated for the producer as a capacity (competence) and for the consumer as a tendency (proneness). According to Ryle, although both can be simulated, we use the abusive word 'charlatan' for the fraud who pretends to be able to bring things off, and the abusive word 'hypocrite' for the one who effects motives and habits.
Chapter Five draws on the work of Schönfeld-Illy. Kirzner distinguishes maximization inside a given ends-means framework from the determination of the framework. The Robbinsian maximizer can perform only the first role. Mises's homo agens can do both. In Kirzner's methodological makeshift, the consumer acts as a pure Robbinsian maximizer. However, inside a Robbinsian framework of given ends and means, the consumer needs the same element of alertness that Kirzner locates in the determination of the framework. The consumer avoids the problem of the immeasurability of utility and shortens the calculation process with the help of three principles. The first is the separate utility of a good. Though the consumer's aim is to reach the greatest utility, he does not and cannot calculate total utility as such, but only the changes in total utility, changes brought about by adding goods to the ones already used. These changes give the total utility of each good separately. The second principle is quid pro quo. Changes in total utility do not give the consumer numbers in which he can calculate. What he can do is compare the changes with other changes. The third is economic relevance. The price relevant for the marginal part has an economic relevance for all other units of the stock of goods. These three principles form the basis of Schönfeld-Illy's theory on the role of prices (that is alertness) in the calculation process of the consumer.
Chapter Six expands on the calculation process of the consumer addressing the question of how the maximizing process of the consumer can be described from a subjective point of view, that is in terms of the components of everyday decision-making. The mathematical mould of neoclassical theory means that for the neoclassical the problem is a mathematical one: the solving of a Lagrangean function. From a theoretical point of view, a consumer has a lot of work to do in computing the marginal utilities. First, he has to line up all the alternative combinations of goods available, then he has to assess the needs successive units of the various goods can satisfy, and finally he has to find out at what point in the row of units satisfaction breaks off. It is impossible, however, to make all the necessary calculations. In reality the consumer has to take a short-cut. The notion of taking a short-cut can be formalized inside the neo-classical model by focusing on the notion of marginal utility: the way it functions in equilibrium and disequilibrium. Saving and consumption patterns are explained for two groups of consumers: (1) the well-established consumers, the ones we know from traditional economic theory, and (2) the trendsetting consumers, who are in disequilibrium by choice. The latter are either short-sighted or far-sighted.
Chapter Seven looks at the notion of marginal utility to answer the question of how a consumer calculates the total value of a divisible amount of goods. Wieser's Multiplicationstheorem des Wertes says that to get the total value, all units of a stock of good have to be multiplied by the attained marginal utility. Böhm-Bawerk's Integrationstheorem des Wertes says that the total value of a stock of goods is the sum of the utilities of the different units. Because Wieser underestimated the total utility of a stock of goods, his formulation found few followers. Schönfeld-Illy's interpretation of marginal utility, that of the economic relevance of a margin for the whole, gives an answer as to why Wieser's description could be true. Schönfeld-Illy solves an inconsistency in the thinking of Wieser, who took the description of marginal utility from the situation in which the calculation was already completed. However, he draws the description of the function of marginal utility from the situation in which calculation begins. Schönfeld-Illy wonders whether the last stage of calculation contains all the things used during the actual calculation process and, that consequently are contained in a conceptual description grafted upon the final stage.
In Part III, "The Austrian Perspective on Consumer Policy", I looked at consumer policy in general, and advertising (the way it functions and can be used to introduce a new product) and products liability (from a neoclassical and Austrian perspective) in particular. Chapter Eight introduces the notion of consumer policy and its link with creativity and entrepreneurship. It especially addresses the question of how the Austrian vision on the market process relates to consumer policy. In other words, what the impact of consumer policy is upon the perception by consumers and producers of the available array of opportunities. To describe the ways consumer policy hampers discovery I used Kirzner's four notions of the undiscovered, the unsimulated, the stifled, and the wholly superfluous discovery process. I concluded that the Austrian notion of the market provides a novel angle for a critique of the regulated consumer. Regulatory restrictions interfere with the spontaneous discovery process the unregulated market tends to generate. Consumer policy stifles the incentive that converts a socially desirable opportunity (an opportunity that transcends an existing framework of perceived opportunities) into a personally gainful one.
Chapter Nine demonstrates that there is room for the praxeological method in economics. Empirical facts cannot discriminate between two opposing hypotheses on advertising. (1) Advertising is partly deceptive and partly manipulative. Without government regulation this situation will continue. (2) Advertising is a good like any other good. The consumer gets the type and quality of advertising he wants and is willing to pay for. Advertising is an essential part of the competition process, making the product known to the consumers. Consumers are not passive actors but by-and-large act in their own self-interest. Chapter Ten expands on advertising by looking at pricing a real novelty. Competition among consumers can be used to spread the news. Where trends are conceived consumers compete, creating the market for the producer. Trends are not sold by competing producers but are bought by competing consumers.
Chapters Eleven and Twelve look at products liability (that is harms arising from commercial products) from the mainstream neoclassical point of view and from the Austrian one respectively. For a neoclassical, costs are objective and are known to the judge, who, by using the so-called Hand Formula, balances expected accident costs against the cost of making the product safer. A defendant is guilty of negligence if P times L is greater than B. Where P is the probability, a loss will occur, L is the value associated with the loss, and B the cost associated with preventing it. For an Austrian, however, since costs are subjective and knowledge cannot be centralized, contract law seems to be the best. In other words, it is the old rule of caveat emptor, "Let the buyer and seller beware". The parties can then arrange the expected costs and benefits beforehand from their own subjective point of view and entrepreneurial insights. The utter stranger (who is no partner in the exchange) whose property rights are violated -there are so-called negative externalities- can claim compensation. The amount of compensation is for the judge on ethical grounds, and not the economist, to decide.On the basis of the first three parts of this thesis, what have neoclassicals and Austrians to say to each other? What is the outcome on the consumer in Austrian economics and the Austrian perspective on consumer policy (cp. Kirzner, 1997, and De Soto, 1998, pp. 78-79)?
The methodological analysis in Part I shows that neoclassicals and Austrians do not have much to say to each other. Theories that do not need testing and are always true are out of the question in the standard neoclassical methodology of empirical falsification. Verbal logic, aprioristic-deductive reasoning leaves room for subjectivism and entrepreneurship, both of which the market process depends on. In other words, the claim of the Austrians that prediction is impossible -because what happens depends on knowledge yet to be created in an entrepreneurial process (to find out things we are not even aware of that we don not know them: to correct genuine errors)- stands against quantitative prediction as a sought and known objective of the neoclassical. The analysis of consumer behavior in Part II shows that neoclassicals and Austrians do not have to say much to each other. For an Austrian, the consumer is a creative entrepreneur who stands in the midst of a dynamic process. For a neoclassical, he is a homo economics who makes rational choices based on constraint maximization in a given and known ends-means relation.
The analysis of consumer policy in Part III shows that neoclassicals and Austrians do not have to say much to each other. For an Austrian, the knowledge the government should act on is subjective, dispersed, and changes all the time. Objective scientific knowledge alone is not enough; there is also the practical and purely subjective knowledge of place and time. For an Austrian, the government's role is to protect the property rights of the individual. If his property rights are involved, the judge decides on ethical grounds; economics is not involved. For a neoclassical, however, there is a complete knowledge of means and ends, though decorated with known uncertainty. Costs are objective and can be measured by a third party.
But is there nothing positive to be said about the neoclassical-Austrian connection? The Austrian revolution was and still is part of a larger tradition (see Chapter 1). It not only started in the 1870s with Menger, but with Jevons and Walras too. All three wanted to theorize. All three wanted to explain market regularities as the outcome of the rational choices of individuals subject to constraints. All endorsed the existence of economic laws showing systematic consequences to our actions. For Mises the notion of economic law is not only the core of classical economics but of neoclassical economics too. All neoclassicals want to explain the undesigned regularities of the market order as the outcome of the meaningful choices of individuals. Therefore Austrians are still part of the economic orthodoxy of neoclassical economics, although they are no longer part of the mainstream Walrasian and Marshallian branch. In other words, to a certain extent we can say that the language differs: formalistic precision in mainstream neoclassical versus verbal elaboration in Austrian economics. The latter reinforces most of the former's conclusions. I would argue that it is partly a difference in methodology: a different road is taken to reach the same conclusions (see for instance the law of decreasing returns in Part I). Of course, an Austrian would say that it is not only the language that differs, but the problem situation too. For him, subjective assessment and entrepreneurship are part of the richness of the empirical world. Both, however, crowd out formalism with its implied form of narrow rationalism and supposition of full availability of information, whether deterministic or probabilistic. Subjectivism and entrepreneurship cannot be analyzed with formal tools without transforming their essence. Simplification has its price.
Therefore, what the neoclassical can learn from the Austrian is that there is more in the world of the theoretical economist than only the economics of perfect competition. There is the competitive-entrepreneurial process of discovery (see Part I). A neoclassical tends to underestimate the learning capacity of individuals (see Part II), while, at the same time, overestimating the economic knowledge of the government. Negative externalities for instance are part of ethics not economics (see our Part III). Nevertheless, a neoclassical economist would counter this by saying that although what an Austrian says on subjectivism and entrepreneurship is very interesting, unless it is stated in formal proof it remains just that -an interesting idea and no more.
Applied welfare analysis (see Part III), however, unlike theoretical economics does not belong to a field where the Austrian and mainstream economist meet all that easily. For the Austrian, if subjective value and the open-ended market process are taken seriously, individual rankings cannot be fused together, and there is no end-state to mimic. There is no norm (taken from a pattern of imagined omniscience) for assessing policies. For the Austrian since sheer ignorance is not incorporated, mainstream welfare economics has no place for those acts of entrepreneurship the equilibrative discovery process depends on. Not only allocative efficiency but speed and accuracy with which the economy identifies and overcomes waste and discoordination are important too. However, compared to more heterodox forms of economics, Austrians and neoclassicals share the importance both give to laissez faire . The Austrian belief in it, compared to mainstream neoclassical economics, is strong. This study's emphasis on subjectivism and entrepreneurship reinforces this belief. The tendency towards greater awareness that leads to equilibrium is fuelled by producers as well as consumers (see Part II). Profit opportunities provide the incentive for both. There is a tendency for entrepreneurial errors to be corrected -not to be made. There is a tendency to be right. There is more to gain from greater awareness than from diminishing awareness; a tendency a changing government policy often frustrates. A certain environment of stability is necessary to overwhelm the forces of disequilibrium.
In other words, Austrian economics reinforces the mainstream belief in a spontaneous equilibrium. Not to the extreme of there always being an equilibrium, but certainly more than there never being an equilibrium. The consumer corrects errors too. Since the consumer is no producer, the Kirznerian notion of entrepreneurship as something correcting an already existing situation waiting to be discovered, fits him. He too gets his "profit" for overcoming ignorance through alertness.
If the just-said is true, the biggest problem for the Austrians is not that their theory is unrealistic or irrelevant, that it gives an inaccurate description of the social world or misunderstands the forces at work. No, their biggest problem is to explain why economists disagree. If theorizing is based on apodictally true premises, only to be stated to be seen as true, the rest being pure deduction, why do not all economists -including the neoclassicals- agree? But even Austrians differ. This is one problem the neoclassicals and Austrians share. As the former emphasize prediction and the latter verbal logic, both have questions to answer. The neoclassical has to explain why if he is so clever in making predictions, he is not rich. And the Austrian has to show why, someone so clever at making deductions does not have all economists agreeing with him.
Finally, is there really no point where Austrians and neoclassicals fully meet as far as the consumer goes? Yes there is. If the neoclassical is right, it follows that with the appropriate policy, consumers can be satisfied. Full knowledge excludes errors in buying: the consumer's nirvana. However, if the Austrian is right, this would mean the end of human action (and economics). The basic premise of the Austrians is "man act". We act if we are dissatisfied; when satisfied, action stops. "Some people sometimes say that they would like to know [...] what the prices are going to be in the stock market next weak. Actually, we do not want to know the future. If you, or I, or anyone could know the future, this would mean it was set and we could no longer act to change it. All human activity is an attempt to change the future. [...] if we had everything we wanted, there would be no reason to live. When the day comes that you have everything you want, let me know, I shall make arrangements to come to your funeral, because you will be dead" (Greaves, 1984, p. 6).
A perfect public policy would therefore solve the problem of the consumer for both neoclassical and Austrian. Either he would be in the consumer's nirvana or be vegetating in a state of non-action like a plant. Which does not make much of a difference: in both cases he would be dead.
We are back at the essence of Austrian economics I began with: the subjectivistic character of choice. For a neoclassical, a fully informed and satisfied consumer is possible. For an Austrian, since choice is essentially purposeful and entrepreneurial, it is an impossibility. Human choices, if real (that is inherently creative) could have been different and have different effects. A situation of full knowledge, a given framework of ends and means, excludes. "[I]ndividual choice," says Kirzner, "is always made with one's antennae alertly switched on to notice opportunities (that already 'exist', or that may be created) worth pursuing even through the mists of an uncertain future" (1982, p. 21).
|The concept of potential Pareto improvement revisited
Jongeneel, R. ; Koning, N.B.J. - \ 1999
Tijdschrift voor sociaalwetenschappelijk onderzoek van de landbouw 14 (1999)3. - ISSN 0921-481X - p. 114 - 126.
economische analyse - welvaartseconomie - sociaal welzijn - macro-economie - economische theorie - efficiëntie - economic analysis - welfare economics - social welfare - macroeconomics - economic theory - efficiency
|Austrian economics: Roots and ramifications reconsidered.
Krabbe, J.J. ; Nentjes, A. ; Visser, H. - \ 1989
Bradford : MCB University Press - ISBN 9780861764341
economische analyse - economische theorie - economie - methodologie - neo-klassieke economie - welvaartseconomie - begrippen - politieke economie - economic analysis - economic theory - economics - methodology - neoclassical economics - welfare economics - concepts - political economy
The idea of environmental welfare economics.
Krabbe, J.J. - \ 1989
Wageningen : Pudoc (Wageningse Economische Studies 12) - ISBN 9789067541442 - 73
conservering - schade - destructie - ecologisch evenwicht - econometrische modellen - econometrie - economische ontwikkeling - economische theorie - economie - milieu - milieueffect - innovaties - mens - wiskundige modellen - neo-klassieke economie - kwaliteit - recycling - sociologie - technische vooruitgang - technologie - theorie - afvalverwerking - afval - welvaartseconomie - begrippen - milieuwetenschappen - menselijke invloed - natuur - politieke economie - conservation - damage - destruction - ecological balance - econometric models - econometrics - economic development - economic theory - economics - environment - environmental impact - innovations - man - mathematical models - neoclassical economics - quality - recycling - sociology - technical progress - technology - theory - waste treatment - wastes - welfare economics - concepts - environmental sciences - human impact - nature - political economy
|Valuation methods and policy making in environmental economics.
Folmer, H. ; Ierland, E.C. van - \ 1989
Amsterdam [etc.] : Elsevier - ISBN 9780444873828 - 259
luchtverontreiniging - basisproducten - kosten-batenanalyse - econometrische modellen - econometrie - economische evaluatie - economisch beleid - economische theorie - economie - milieu - milieuwetgeving - milieubeheer - milieubeleid - milieubescherming - overheidsbeleid - investering - wiskundige modellen - neo-klassieke economie - kwaliteit - bodemverontreiniging - theorie - waarden - waterverontreiniging - welvaartseconomie - milieuwetenschappen - air pollution - commodities - cost benefit analysis - econometric models - econometrics - economic evaluation - economic policy - economic theory - economics - environment - environmental legislation - environmental management - environmental policy - environmental protection - government policy - investment - mathematical models - neoclassical economics - quality - soil pollution - theory - values - water pollution - welfare economics - environmental sciences
Welvaart en traditie
Neijtzell de Wilde, A. - \ 1935
Wageningen : Veenman - 25
cultuur - diffusie - indonesië - markteconomie - spreken in het openbaar - tradities - welvaartseconomie - welvaartsstaat - nederlands indië - culture - diffusion - indonesia - market economics - public speaking - traditions - welfare economics - welfare state - netherlands east indies
Rede Landbouwhoogeschool Wageningen, mei 1935