EURO 2025 Leeds
Abstract Submission

348. Value-Driven Social Welfare Analysis based on Multidimensional Stochastic Dominance: Theory and Application to Comparisons of European Populations

Invited abstract in session MB-33: Scenarios and Stochastic Dominance, stream Decision Analysis.

Monday, 10:30-12:00
Room: Maurice Keyworth 1.31

Authors (first author is the speaker)

1. Nikolaos Argyris
School of Business and Economics, Loughborough University
2. Lars Østerdal
Copenhagen Business School
3. M. Azhar Hussain
Department of Social Sciences and Business, Roskilde University

Abstract

Recent decades have seen an increased acceptance, globally, that the measurement of social welfare must encompass more than material economic standards, and include dimensions such as health, education, social relationships etc. At the heart of this problem is the question how to compare population distributions over a multi-dimensional space. Here we introduce the theoretical framework for such multi-dimensional comparisons and apply this to a specific dataset. We present new results that characterise two multidimensional stochastic orders and permit the practical comparison of discrete multidimensional distributions. These form the basis for a new framework for welfare evaluation, which accommodates multiple dimensions of individual welfare and enables robust social welfare comparisons. Our framework allows incorporating concerns about distributional inequality in social welfare evaluation. Additionally, it can incorporate value-judgements, which allow for capturing specific policy or ethical considerations in the social evaluation exercise and have the potential to significantly sharpen the dominance relations. The framework also incorporates a welfare measurement scale. This facilitates a richer form of analysis, compared to other dominance-based methods, from which we can gauge the overall level of social welfare in different populations. We illustrate the application of our framework with a case study investigating social welfare across 31 European countries.

Keywords

Status: accepted

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