A simplified model for social welfare analysis : an application to Spain, 1973-74 to 1980-81

Most of the literature on income distribution has concentrated on inequality. In this paper we introduce a concern for efficiency in a social welfare model. We propose a simple but useful specification which combines three features: (i) the selection of measurement instruments in the relative and the absolute case on the grounds of their properties for applied work; (ii) a procedure to make welfare comparisons across households with different needs, in a model in which equivalence scales depend only on house-hold size; and (iii) the use of household specific statistical price indices to make intertemporal comparisons in real terms. The methodology is applied to the study of the role of prices and demographic effects in the evolution of the standard of living in Spain from 1973–74 to 1980–81.This work is part of a larger project carried on under the auspices of the chair Gumersindo de Azarate, presently occupied by the author and funded by the Ministerio de Trabajo y Asuntos Sociales of Spain. The excellent research assistance provided by Miguel Angel Benito and Mercedes Sastre, whose work has been partly financed by Project PB93-0230 of the Spanish DGICYT, is gratefully acknowledgedPublicad