Social Welfare Function Methods

The video explains social welfare as the collective utility for a group, which can be defined in various ways. It introduces three methods for constructing social welfare functions: listing values with importance weights, adding up individual utilities, and conducting stakeholder analysis. Each method involves different approaches to decision-making and utility assessment, highlighting the importance of weighing factors like economic well-being, equality, and freedom.

What is a simple definition of social welfare?

• The individual happiness of a person

• The collective utility for a group of people

• The economic growth of a country

• The political stability of a region

Who is typically responsible for maximizing a social welfare function?

• Private companies

• International organizations

• Individual citizens

• The government or leaders of a group

What is the first method of constructing a social welfare function?

• Summing up individual utilities

• Maximizing economic output

• Conducting a stakeholder analysis

• Listing values to optimize with importance weights

In the first method, what might cause disagreements among leaders?

• The importance weight of each value

• The method of data collection

• The choice of decision variables

• The number of stakeholders involved

What does the second method of constructing a social welfare function involve?

• Maximizing economic output

• Summing up the utility of all individuals

• Listing values to optimize

• Conducting a stakeholder analysis

In the second method, how can weights be assigned to individuals?

• Based on their income level

• Equally for everyone

• By their educational background

• According to their age

What is the third method of constructing a social welfare function?

• Maximizing economic output

• Listing values to optimize

• Summing up individual utilities

• Conducting a stakeholder analysis

In stakeholder analysis, how are different groups treated?

• All groups are treated equally

• Each group's utility is summed separately

• Only the largest group is considered

• Groups are ignored in decision-making

What can be a reason to assign different weights to stakeholders?

• To reflect their share of the population

• To simplify the analysis

• To reduce the number of variables

• To increase the complexity of the model

What is the purpose of setting up a social welfare function?

• To increase individual wealth

• To structure decision-making for groups

• To reduce government intervention

• To promote international trade