Editing Kaldor–Hicks efficiency (section)

==Criticisms==

Perhaps the most common criticism of the Kaldor-Hicks criteria is that it is unclear why the ''capacity'' of the winners to compensate the losers should matter, or have moral or political significance as a decision criteria, if the compensation is not actually paid.

At a more technical level, various versions of the Kaldor–Hicks criteria lack desirable formal properties. For instance, [[Tibor Scitovsky]] demonstrated that the Kaldor criterion alone is not [[Antisymmetric relation|antisymmetric]]: it's possible to have a situation where an outcome A is an improvement (according to the Kaldor criterion) over outcome B, but B is also an improvement over A. The combined Kaldor–Hicks criterion does not have this problem, but it can be [[Intransitivity|non-transitive]] (though A may be an improvement over B, and B over C, A is not thereby an improvement over C).<ref>{{cite journal |last=Scitovsky |first=T. |author-link=Tibor Scitovsky|year=1941 |title=A Note on Welfare Propositions in Economics |journal=Review of Economic Studies |volume=9 |issue=1 |pages=[https://www.hujingbei.net/upload/2007_11/07110714376633.pdf#page=2 77–88] |doi=10.2307/2967640 |jstor= 2967640|publisher=The Review of Economic Studies, Vol. 9, No. 1 }}</ref><ref>{{cite web |title=The Paretian System: Scitovsky Reversals and the Double Criteria |last=Fonseca |first=G. L. |url-status=dead |url=http://cepa.newschool.edu/het/essays/paretian/paretosocial.htm#scitovsky |archive-url=https://web.archive.org/web/20060215000915/http://cepa.newschool.edu/het/essays/paretian/paretosocial.htm#scitovsky |archive-date=15 February 2006 |df=dmy-all }}</ref>