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Neuroeconomics does not directly refer to neuroscience, but it is usually perceived as a field that incorporates psychology with economics. Neuroeconomics is a research field that considers the following claims: 1) physiological and psychological evidence can be used to either discard or reinforce certain economic models and methodology; and 2) economic welfare analysis should be making use of “true utility” rather than “choice utility” because it is more important to account for what makes individuals happy in contrast with the utilities governing choice. Because neuroeconomics surpasses conventional economic practices by integrating psychological insights and neuroscientific evidence, this chapter illustrates how neuroeconomics attempts to impose changes in methodology, and discusses a neuroscience critique of traditional economics.

This chapter considers how the resources of well-being are conventionally evaluated, and in particular, the impact of economic resources on subjective and social well-being. Affluence has liberated most people from the anxieties of subsistence, but much more moderate affluence would have sufficed. Since the Second World War, and especially since the 1970s, self-reported happiness has languished at the same levels, or has even declined. That is the ‘paradox of happiness’. On any measure used, the rise of aggregate money incomes has done little or nothing to improve the sense of well-being. Levels of life expectation have been similar in rich and in middle-income countries, and higher than the United States even in several poor countries.

Having looked in detail at the impact on the health and development of children of all ages, the economic welfare of families, and equality, this chapter provides some answers to what can be done about meeting the critical needs of children and families in the midst of globalization. At present, the problem with globalization is with how the gains are being divided up. Systems have been put in place to protect the rights of capital in ways that have far outpaced the protections for working parents and their children. This chapter suggests putting in place universal standards for minimum decent working conditions. These need to comprise the kind of conditions essential to humane survival both for adults and the children they care for, including a living wage, parental leave, leave and flexibility to care for sick family members, and humane hours.

This chapter summarizes the conclusions of each chapter, and integrates them into an argument. It then considers the policy implications of analysis when government objectives are partly exogenous and partly endogenous. Lastly, the chapter places the Chinese experience within a broader empirical and theoretical context of rural–urban relationships, and states that we have been concerned to analyse rural–urban relationships in China in both a normative and a positive sense: to evaluate and to explain the difference in economic welfare between peasants and workers. It also discusses the implications for policy and the Chinese experience in perspective and states that the Chinese case can be viewed from two perspectives, the empirical and the theoretical. Comparisons can be made to other countries to establish whether the rural–urban divide in China is ordinary or extra-ordinary. Various models of rural–urban relationships can also be examined for their relevance to the Chinese experience.

This chapter states that the book is about the economic relationships between rural and urban China. The book is said to have derived its motivation from the fact that urban-dwellers have a considerable advantage over rural-dwellers, and seeks to examine how these two sectors compare in various dimensions of economic welfare. It also explores the economic policies and sectoral interactions which bring about the urban advantage. The chapter discusses the treatment of rural–urban relationships in economic development, which will help in the assessment of how far the Chinese experience represents a special change. It furthermore examines the sources of rural–urban division, which are, namely, the institutional, administrative, and political arrangements. The chapter also gives some basic statistics, and explains the scope and method of analysis used and the plan of the study.

Chapter 2 presents the underlying economic principle of the WTO—the gains from trade—and how the WTO agreement translated that principle into an international set of trade policy rules. It also focuses on the basic arguments for “free trade” and what they mean for WTO. The chapter draws conclusions that most countries recognize that trade improves their overall economic welfare, the political forces that favor trade restrictions are strong and difficult for governments to resist, and that a global trading system allows governments to overcome the political opposition to trade liberalization and to garner the gains from trade.

This chapter looks beyond the transformation of economic priorities to those of society (or societies) at large, asking what are the challenges and opportunities of global capitalism for wider societal aspirations and goals, and what are the implications for the attitudes and behaviour of individuals and communities. In the analysis he presents, Jack Behrman pays especial attention to those goals of society, such as good health and the absence of violent behaviour, that are not normally captured in the standard measures of economic welfare. He identifies and discusses seven criteria of acceptability of a new global order, and outlines the contribution of the different elements of society in promoting these in an equitable and sustainable way. Behrman believes that the extended geographical radius of capitalism demands a careful reappraisal of its moral foundations, and offers a blueprint of how such a transformation may be accomplished by a reconfiguration of values and responsibilities.

This chapter examines the welfare-economic approach to environmental, health, and safety policy making. It argues that by resorting to a series of debatable techniques in order to maintain the perception that welfare maximization only passively and impartially aggregates the autonomous desires of individuals, welfare economists end up discarding many of the considerations that give meaning to environmental, health, and safety laws.

This chapter lays out the analytical framework, which shows how competition (exit) and collective action (voice) affected the economic welfare of coal miners. The framework starts with a basic economic model in which employers compete with hundreds of other mines when hiring labor. The model of labor market competition is expanded to consider the impact of positive information and transportation costs. In competing for labor, employers could alter not only wages but a number of other features of the employment package, like safety or the quality of life in the company town. Unionization alters the nature of bargaining between miners and employers. Neoclassical labor economists argue that labor unions, by limiting labor supply to employers, raise wages for their members at the expense of non-union workers and employers. Unions in some settings can provide benefits to both employers and workers by helping workers negotiate workplace public goods, by cutting turnover, and by raising morale.

Procurement regulation has been developed largely by societies which rely on concepts based on welfare economics in the market economy and is currently being adopted in societies which are embracing the market economy. How those societies respond to the laws of the market depends, to a large extent, on political factors. In the United States, for example, heavily influenced by free market principles, regulatory policy generally reflects the belief that the market works well under normal circumstances and should be interfered with only in specific cases of market failure. The development of procurement regulation within the market economy implies that its purpose is in some way an instrument of the pursuit of economic welfare. This chapter deals with allocative efficiency as well as market and institutional failures leading to conditions of imperfect competition which negatively affect economic efficiency (Pareto efficiency). It also discusses perfect competition, economic theory and procurement, agency theory, consequences for procurement regulation, transaction costs, and barriers to entry.

This chapter examines the dynamics of public opinion about the economy before, during, and after the Great Recession of 2008 across 11 European countries. Specifically, using monthly public opinion data, the chapter describes the nature of opinion change resulting from turmoil in the global economy and investigates whether the nature of the change and opinion were shaped by macro-level political and economic factors, including the size of welfare states.

This chapter considers what an alternative account of social value might offer to the analysis of the issues in well-being and welfare. It introduces the idea that well-being is directly related to access to social value, and that economic welfare must be seen as part of a particular system for exchanging and distributing such value. As with all systems for symbolic interaction, negative and positive transactions occur. The concepts of loss, cost, debt, insolvency and ruin are important and necessary to competition for esteem, success, and celebrity, in which the price of failure is exclusion, stigma, shame, obscurity and material poverty. The culture of contract and economic welfare is not a replacement for archaic status, authority, dominance and subordination: it is an instance of how these forms of social value are embodied in the production and exchange of material goods and services. Discussed in this chapter are: the economics of esteem; choice, contract and culture; making competent individuals; and the transformation of collective life.

The world trading system seems to be moving, not just to a system of regional free trade areas (FTAs) but to a system of large continental groupings. In Europe, the European Union (formerly the European Community) removed internal barriers in 1992 and admitted three new members in 1994, bringing the total to fifteen. In December 1994, the leaders of Western Hemisphere countries met in Miami and agreed to form an FTA for the Americas. This paper investigates three questions. According to bilateral trade data, is the world indeed breaking up into a small number of continental trade blocs? In theory, is a small number of continental blocs good or bad for world economic welfare? For actual parameter values, is the current pattern of trade regionalization welfare-promoting or welfare-reducing? The welfare implication of continental blocs depends on the values of some crucial parameters. This chapter focuses on the real-world counterparts of these key parameters, particularly the magnitude of transport costs.

This chapter presents a welfare economic analysis of the distributional consequences of growth, a problem that has attracted much attention from development economists of late. We shall explore the similarities and differences between the absolute income and poverty and relative inequality approaches for a general dualistic development model and for three stylized special cases. It will be shown that these approaches are not always in agreement and, more disturbingly, that the most notable discrepancy is found in the most relevant stylized model-growth via the transfer of population from a backward to an enlarging advanced sector. The fact of these discrepancies raises the important question of how to measure changing income distribution in a manner consistent with the judgments we wish to make about the alleviation of absolute poverty and changes in relative income inequality. A general welfare function is formulated to address these issues.

In the twentieth century, new information technology has the potential to influence the lives of ordinary citizens as much as it has influenced business, education, and government. The majority of individuals and households are using personal computers, the Internet, and mobile telephones. This book is about the potential effect of these new technologies, as they enter our homes and our daily lives, to change the range of activities we pursue, the way we perform old activities, our relationships with other people, and our personal and economic welfare. This chapter introduces the main themes of the book, describing the social impact of the new technologies, personal welfare outcomes, and the theoretical framework for understanding the social impact of technology.

Even before there were poverty measures for descriptive purposes, there were attempts to define what constitutes a reasonable minimum income level to not be considered poor in specific settings for the purposes of policymaking. Indeed, the basic idea of such a “poverty line” is one of the oldest and most well-known concepts found in applied economics. The economic interpretation of a poverty line is as the cost of attaining a given level of economic welfare or “standard of living” in different places or different dates. The minimum level of economic welfare needed to not be considered “poor” can be determined either objectively—meaning that it is set by an observer, based on data—or subjectively, meaning that it is based on what people themselves think about what constitutes poverty in the society in question. The chapter studies both approaches.

China has maintained a phenomenal rate of growth over the last two decades (until very recently), with annual GDP growth averaging about 10 percent. What accounts for this impressive growth performance? How long is this growth pattern likely to last and what are the risks? This chapter attempts to address these questions by providing a critical evaluation of the combination of macroeconomic and structural policies that has resulted in high rates of growth in recent years. The main argument is that the set of policies that has generated impressive headline GDP growth masks a number of problems that have led to unbalanced growth and portend serious risks for the future. It then discusses the main elements of a reform agenda that would ensure the sustainability of China's growth, improve the economic welfare of its citizens in a commensurate manner, and make the economy more resilient to shocks.