Welfare Economics and Applications

This Economic analysis of allocations and policies walks on two legs: efficiency and equity. It is important that economic experts incorporate the considerations that are relevant to the users of their evaluations and do not smuggle in special views and biases in an opaque way. Witness the quarrel between Nordhaus and Stern on the discount rate for the assessment of climate change mitigation. Nordhaus accused Stern of British imperialism and “Government-house utilitarianism” and claimed that his own approach was more democratic. In this course we present how evaluation criteria are undergoing important changes, in particular under the influence of recent theories of justice, and can now better assess the efficiency and equity components of allocations and policies. And we illustrate how this gets applied in various domains of policy and social analysis (risk, inequalities, health, income tax, well-being indicators, climate). This course is at the intersection of social choice theory, welfare economics, public economics, game theory, and political economy. This course is addressed to all students planning to work on policy topics, and also introduces to open research questions.

Evaluation: Grading will rely on a final essay (around 5,000 words) for 70% and participation for 30%.

Teacher(s):

• Franz Dietrich
• Marc Fleurbaey
• Grégory Ponthière
• Stéphane Zuber

Practical Information: S3, 36h, Campus Jourdan