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Instrumental Values

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I

NSTRUMENTAL

V

ALUES

Andrew Chesher

THE INSTITUTE FOR FISCAL STUDIES

DEPARTMENT OF ECONOMICS

,

UCL

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(11)

Lqvwuxphqwdo Ydoxhv 43

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7

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(12)

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(13)

Lqvwuxphqwdo Ydoxhv 45

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(14)

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(15)

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(16)

Lqvwuxphqwdo Ydoxhv 48

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(17)

Lqvwuxphqwdo Ydoxhv 49

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(18)

Lqvwuxphqwdo Ydoxhv 4:

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50

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7

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(19)

Lqvwuxphqwdo Ydoxhv 4;

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(21)

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\4 @ kQ4 +\5> [> 4> 5,

\5 @ kQ5 +[> 5,

zkhuh kQ

4 dqg kQ5 duh qrupdolvhg vwuxfwxudo ixqfwlrqv1 Qrwh wkdw li wkh txdqwlohv ri %4

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7

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4 zlwk uhvshfw wr yduldwlrq lq51

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7

k4>%5+{

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dqg li erwk Frqglwlrqv +5d, dqg +5e, krog wkhq

7

k4>%5+{3> {33, @kQ4 +|5> {> 4> 54,kQ4+|5> {> 4> 55, iru dq|i{3> {33> {j 5Y1

Lw iroorzv wkdw xqghu wkh wuldqjxodulw|/ frpsohwhqhvv dqg +vwurqj, prqrwrqlflw| frq0 glwlrqv dqg li Frqglwlrq +4d, dqg rqh ru erwk ri Frqglwlrqv +5d, dqg +5e, krog wkhq d sduwldo glhuhqfh ri wkh qrupdolvhg vwuxfwxudo ixqfwlrqkQ

4 zlwk uhvshfw wr yduldwlrq lq5

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dqgP4uhgxfhg irup htxdwlrqv56

\l @kl+[> %l> = = = > %P,> l@ 5> = = = > P=

(22)

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iroorzv1

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l+{,zklfk wdnh ydoxhv

h

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7

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k4+|5+{,> = = = > |m4+{,> |m+{33,> |m.4+{,> = = = > |P +{,> {> h4> = = = > hP,

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@ k4+|5+{33,> = = = > |m4+{33,> |m+{3,> |m.4+{33,> = = = > |P +{33,> {33> h4> = = = > hP,=

Uhfxuvlyho| ghqh

T

P+{, T\Pm[+P> {,

T

P4+{, T\P4m\P[+P4> TP+{,> {,

T

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111 @ 111

vr wkdwT

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7

T4+{3> {33,T4+{3,T4+{33,

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(23)

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91 Frqfoxvlrq

Wklv sdshu kdv h{soruhg wkh olplwv wr lghqwlfdwlrq ri fkdudfwhulvwlfv/ vshflfdoo| sduwldo glhuhqfhv ri vwuxfwxudo ixqfwlrqv/ lq srvvleo| qrqvhsdudeoh vwuxfwxuhv1 Wklv h{sorudwlrq kdv ehhq olplwhg wr=

41 frpsohwh wuldqjxodu vwuxfwxuhv/

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(24)

Lqvwuxphqwdo Ydoxhv 56

Uhihuhqfhv

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Fkdxgkxul/ S1/ +4<<4,= Qrqsdudphwulf hvwlpdwlrq ri uhjuhvvlrq txdqwlohv dqg wkhlu orfdo Edkdgxu uhsuhvhqwdwlrq/Dqqdov ri Vwdwlvwlfv/ 4</ :930:::1

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