This paper aims to estimate a set of welfare weights for Turkey, based on per capita regional incomes, and to present them for possible policy consideration by the government.
Abstract
Purpose
This paper aims to estimate a set of welfare weights for Turkey, based on per capita regional incomes, and to present them for possible policy consideration by the government.
Design/methodology/approach
An important component of the regional welfare weight measure is the elasticity of marginal utility of income (e), and it is estimated using a tax‐based method incorporating the principle of equal absolute sacrifice of satisfaction.
Findings
The estimated measure of e for Turkey is 1.25, and this value, in combination with per capita income levels, produces measured regional welfare weights for the poorest provinces that are over ten times as high as those for the richest provinces.
Research limitations/implications
A lack of suitable data makes it difficult to use alternative approaches to the tax‐based method for the purpose of cross checking results for e. Results based on these other approaches involving behavioural evidence are presented for some other countries for comparison purposes.
Originality/value
This paper presents estimates of regional welfare weights for Turkey based on sound economic principles. It will be of interest to academics who are concerned with issues relating to cost‐benefit analysis as well as practitioners who are involved in the allocation of public funds to different regions in Turkey.
David J. Evans and Haluk Sezer
This paper sets out to estimate discount rates for EU members, on a consistent time preference basis, for application in the appraisal of social projects. The value of the…
Abstract
Purpose
This paper sets out to estimate discount rates for EU members, on a consistent time preference basis, for application in the appraisal of social projects. The value of the discount rate can have an important influence on the allocation of funds between short‐term and long‐term uses.
Design/methodology/approach
A key component of the social discount rate is the elasticity of marginal utility of consumption (e) and it is estimated from OECD data relating to marginal and average rates of income tax. A tax model based on the principle of equal absolute sacrifice of satisfaction is employed.
Findings
The estimated discount rates, based on social time preference, mostly lie in the range 3‐5.5 per cent. The main source of variation in rates is differential growth in per capita consumption. Estimates of e are reasonably consistent and for 15 of the countries they lie in the range 1.3‐1.6.
Research limitations/implications
For more comprehensive tax information, then additional data from each country's tax authority are required. The research on estimates of e and social time preference rates can be extended to cover non‐European countries.
Practical implications
In the interests of a consistent equitable treatment of future generations, member countries of the EU should employ the same methodology in estimating social discount rates.
Originality/value
This paper applies a practical tax‐based approach to the estimation of e for a large number of European countries. The paper will be of interest to academics specialising in welfare economics and to practitioners involved in social project appraisal.