Using Ordinal Voting to Compare the Utilitarian Welfare of a Status Quo and A Proposed Policy: A Simple Nonparametric Analysis

TL;DR

This paper introduces a nonparametric method using ordinal voting to compare utilitarian welfare between a status quo and a new policy, providing bounds on welfare differences based on voting outcomes and known welfare levels.

Contribution

It offers a simple, nonparametric analysis linking voting outcomes to welfare comparisons, incorporating bounds and decision rules that differ from majority voting.

Findings

Voting outcome and welfare bounds inform policy comparison.

Proposed decision rules can favor the new policy based on vote share and welfare bounds.

The method provides an alternative to majority rule for welfare assessment.

Abstract

The relationship of policy choice by majority voting and by maximization of utilitarian welfare has long been discussed. I consider choice between a status quo and a proposed policy when persons have interpersonally comparable cardinal utilities taking values in a bounded interval, voting is compulsory, and each person votes for a policy that maximizes utility. I show that knowledge of the attained status quo welfare and the voting outcome yields an informative bound on welfare with the proposed policy. The bound contains the value of status quo welfare, so the better utilitarian policy is not known. The minimax-regret decision and certain Bayes decisions choose the proposed policy if its vote share exceeds the known value of status quo welfare. This procedure differs from majority rule, which chooses the proposed policy if its vote share exceeds 1/2.