A Constant-Utility Index of the Cost of Living

Klein, Lawrence R.; Rubin, Harvey W.

doi:10.2307/2295996

Cited by 264 publications

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“…However, there were many demand models that produced by many economists. Klein & Rubin (1948) Theil (1975) modified the demand model created by Stone (1954 Transcendental Logarithmic Demand System a.k.a Trans Log Model is a model that employs the direct utility function, indirect utility function, and the cost function. Developed by Christensen, Jorgenson, & Lau (1975), this model is known for its flexibility.…”

Section: ) Demand System Modelsmentioning

confidence: 99%

Energy Goods Demand in Tabalong Regency: Almost-Ideal Demand System Approach

Murjani¹

2017

J. Bina Praja

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The declining trend of Tabalong Regency's economic growth in recent years adversely affected the poverty rate. Further, the recent energy subsidy policy applied by the Indonesian Government has pushed the subsidy's budget down for some energy goods. Therefore, there should be an awareness regarding the current energy policy and the impact on the poverty particularly in Tabalong Regency. This paper investigates the demand system for the three main energy goods; premium fuel, electricity, and Liquid Petroleum Gas (LPG) in Tabalong Regency of the South Kalimantan Province. Although the same method was previously used on the different topics, this paper uniquely utilizes the combined Linear Approximation and Quadratic Almost-Ideal Demand System on the particular energy policy topic. This paper utilizes the National Social Economics Survey conducted by BPS-Statistics of Tabalong Regency in 2016. The results show that the income elasticity of demand for the top 60% and the bottom 40% of the income groups were positive; however, slight differences could be seen. For the top 60% of the income group, the income elasticities of demand were 0.97, 1.02, and 1.08 for premium fuel, electricity, and LPG respectively. On the other hand, the bottom 40% of the income group had 0.99, 1.07, and 0.91 of income elasticity of demand for premium, electricity, and LPG. The price elasticity of demand for both income groups had negative signs, which is agreeing with the theoretical demand function. These results indicate that the current energy policy should continue with securing the poor households from the possible effect.

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Section: ) Demand System Modelsmentioning

confidence: 99%

Energy Goods Demand in Tabalong Regency: Almost-Ideal Demand System Approach

Murjani¹

2017

J. Bina Praja

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“…Because such measures also take into account changes in environmental and other nonmarket factors that affect consumers' well-being, this would narrow the gap between an ideal cost-ofliving index (e.g., as defined by Klein and Rubin 1948) and the currently available price indices. Technically, the urban sustainability index should thus be conceptualized as a traditional price-quantity index, much like other economic indices such as the BLS's CPI-U or the BEA's GDP and PCE deflator.…”

Section: From Theory To Practice: Linking Urban Sustainability and Thmentioning

confidence: 99%

Are Green Cities Nice Places to Live? Examining the Link between Urban Sustainability and Quality of Life

Bieri¹

2013

Michigan Journal of Sustainability

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The growing importance of nonmarket assets such as the environment, combined with the unprecedented availability of high-resolution data, has renewed broad interest in quantifying sustainability at different spatial levels. Policy-related decision making requires that potential sustainability measures meet three key requirements: (i) sustainability metrics need to be comprehensive so that they reflect the experience of representative households, (ii) sustainability indices need to be comparable across different geographic scales, and (iii) measures of sustainability need to be economically meaningful, ideally tying into the larger system of national accounts. However, conventional sustainability indices do not tend to meet these criteria, which renders them inappropriate for public-policy efforts. The subjectivity and theoretical inconsistency of common sustainability indices presents the biggest obstacle for their adoption as valid public policy targets. This article introduces an urban sustainability index that is based on a theoretically consistent, empirical measure of quality of life. Specifically, this article shows that greenness of cities has a strong positive correlation with urban quality of life, suggesting that the greener the city, the nicer a place to live it is. This is largely because energy efficiency is capitalized into economic activity and ultimately into urban quality of life. This relationship appears to hold across cities of all sizes, clearly emphasizing the direct link between progressive environmental policy and locational desirability. The takeaway message is straightforward: More "greenness" correlates to higher quality of life in urban areas. "We must slow the rush to public acceptance of urban disamenities . . . as the defenders of the great cities we take Faustian positions; we see the positive values of civilization flowing from them." (Alonso 1976, p.54) 52 Michigan Journal of Sustainability Quantifying Sustainability for Public PolicyClimate change is expected to have significant economic impacts and is generating the near term-need for sizeable investments in infrastructure, mitigation and preparedness projects. Yet because the transition to sustainable growth and the comprehensive reduction of CO 2 greenhouse gas emissions from growth-related energy consumption carry all the hallmarks of public goods, these goals will not be achieved by private sectors alone. Instead, there is an active role for public policy. From the perspective of policy makers, however, the prioritization of such large investment needs is very complex and fraught with a number of implementation challenges. To make matters worse, the recent financial crisis has left federal, state and particularly municipal governments in a state of fiscal crisis with very little capacity to make the necessary investments to achieve de-carbonization in the housing sector, transportation and public infrastructure.All too often, projects that require large financial commitments are ignored, crowded out by the near-...

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“…In this analysis, the ultimatum game experiment is given a new sense of utility threshold measurement, a typical psychophysics interpretation. In this section, a mathematical demonstration will identify the logarithmic law with Klein-Rubin utility function (Klein & Rubin, 1947) in a new experimental scheme, and finish the key preparation for setting up an experimental procedure to test the utility maximization hypothesis.…”

Section: Introductionmentioning

confidence: 99%

“…One is the individual utility measure, and another the average utility measure. The former is usually followed by researchers who probe the features of utility concept itself, often seen in most of experimental studies (e.g., Fisher, 1892;Mosteller and Nogee, 1951;MacCrimmon and Toda, 1969;Kahneman and Tversky, 1979;Starmer, 2004), and the latter is usually followed by those who use econometric models to describe realistic markets, often seen in applied studies of market empirical data (e.g., Klein and Rubin, 1947;Stone, 1954;Liuch, 1973;Houthakker, 1960;Theil, 1965;Deaton and Muellbauer, 1980). The two paths separately stretch in relatively independent two fields of experimental and econometric studies, and cause isolation between them.…”

Section: Introductionmentioning

confidence: 99%

“…Namely, it will determine parameters in a utility function by using averages of subjects' performances in experiments. Another highlights in this paper is Klein-Rubin utility function (Klein and Rubin, 1947) based on average measures, which has been demonstrated in Section 2 as a psychophysical function for utility and is given a behavioral economics sense. This will provide a realizable framework to estimate both the econometric model Linear Expenditure System (Stone, 1954) and the utility function in psychophysical paradigm simultaneously in a set of experimental data, and further, to form a new way to experimentally test utility maximization hypothesis, which is so fundamental and important but has never been tested in experiments since Gossen proposed it in 1854.…”

Section: Introductionmentioning

confidence: 99%

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Psychophysical Interpretation for Utility Measures

He¹

2011

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Psychophysical Interpretation for Utility Measures Yuqing He Jinan University, GuangzhouAbstract The paper explores utility measures by combining experiments with mathematical derivations in psychophysics paradigm. The analysis on ultimatum game experiment reveals an evidence for utility threshold and thus supports Bernoulli's utility logarithmic law. Both experimental results and theoretical derivations show that the logarithmic law is suitable for the description of commodity choice and the power law for risk choice. The further mathematical demonstration indicates the logarithmic law for utility scaling to be a Klein-Rubin utility function, a utility function well defined in microeconomics. Based on this, the experimental utility measure is connected with the econometric model Linear Expenditure System, and presents an experimental procedure for testing the utility maximization hypothesis, which will remove a long unsettled perplexity in a fundamental stone of economics since Gossen proposed it in 1854. JEL A12, D01

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A Constant-Utility Index of the Cost of Living

Cited by 264 publications

References 0 publications

Energy Goods Demand in Tabalong Regency: Almost-Ideal Demand System Approach

Energy Goods Demand in Tabalong Regency: Almost-Ideal Demand System Approach

Are Green Cities Nice Places to Live? Examining the Link between Urban Sustainability and Quality of Life

Psychophysical Interpretation for Utility Measures

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