PHIL224 Chapter Notes -Lexicographic Preferences, Pareto Efficiency, Economic Efficiency
8 Oct 2013
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Furthermore, these preferences are not lexicographic and there is no limit on wants. Example: bag a: 2 apples and 2 oranges = bag b: 1 apple and 3 oranges. If the substitution principle applies to good things that are derived from a clean environment, then it is possible to put a price on those things. If benefits exceed cost, gainers could compensate losers. Voluntary exchange of labour for money: i work at payless for . 25/hour. The government could use the tax paid to compensate those who are damaged by the pollution: the value of saving a life can be calculated from information on individuals" trade-offs between risk and money, ex. 1000 people each with a chance of 0. 004 of dying in the next year. Suppose an environmental change would reduce that chance to 0. 003 (a difference of. 0. 001) and each person is willing to pay to implement that change. We did something that yield the benefit of x today.
