Kaldor–Hicks Efficiency

Kaldor–Hicks efficiency, named for Nicholas Kaldor and John Hicks, also known as Kaldor–Hicks criterion, is a measure of economic efficiency that captures some of the intuitive appeal of Pareto efficiency, but has less stringent criteria and is hence applicable to more circumstances. Under Kaldor–Hicks efficiency, an outcome is considered more efficient if a Pareto optimal outcome can be reached by arranging sufficient compensation from those that are made better off to those that are made worse off so that all would end up no worse off than before.

Read more about Kaldor–Hicks Efficiency:  Explanation, Use in Policy-making, Criticisms

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Kaldor–Hicks Efficiency - Criticisms
... The most common criticism of the Kaldor–Hicks criterion is the taking into account of only the absolute level of income, not its distribution ... A related problem is that any social welfare functions based on Kaldor–Hicks criteria are cardinal in nature, and therefore suffer from the aggregation ... by the marginal utilities, the social welfare function implicit to the Kaldor–Hicks compensation principle is represented by anti-egalitarian, concave indifference curves ...

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