Social Welfare Changes in Iran (Paratian and non-Paratian Cardinal Social Welfare Function Approach)

Ebadi, Jafar; Shahiki Tash, Mohammad Nabi; Darvishi, Bagher

doi:10.22096/esp.2012.26170

Social Welfare Changes in Iran (Paratian and non-Paratian Cardinal Social Welfare Function Approach)

Document Type : Original Article

Authors

Jafar Ebadi ¹

mohammad nabi shahiki tash ²

Bagher Darvishi ³

¹ Associate Professor, Faculty of Economics, University of Tehran

² Assistant Professor, Faculty of Economics, Sistan and Baluchestan University

³ Assistant Professor of Ilam University

10.22096/esp.2012.26170

Abstract

In this paper we have used Sen Welfare function along with Generalized Sen Welfare Function for evaluating the welfare change in Iran. We have also used the substitution rate between efficiency and inequality, marginal substitution rate between social welfare and income, and elasticity of welfare with respect to inequality for the evaluation. Results of the finding show that social welfare has increased in 2002-2007, 1997-2001, and 1992-1996 periods compared to 1971-1976 period by the rates of 4.9, 3.1, and 2.7 percent respectively. This shows that the public policy decisions taken by the government during the 1997-2007 periods had an effective role in increasing the per capita income and also in reducing the income inequality. Results of the study also showed that the welfare change due to per capita income is greater than welfare change due to income inequality reduction in the period 1971-2007 (except for 1977-1986). The important finding of this study was that increase in per capita income did not result in increase in income inequality. Therefore it seems that there was not a tradeoff between equity and efficiency in that period in Iranian economy. So, pursuing the policies for increasing the efficiency in economy is a proper policy for increasing the social welfare in Iran.

Keywords

Social Welfare

Cardinal

Pareto Optimality

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