TRANSLATION HOMOTHETICITY

The concept of translation homotheticity is introduced and defined. It is demonstrated that translation homotheticity is necessary and suffi cient for: disposable surplus to be independent of the reference utili ty, Luenberger's compensating and equivalent benefits to be independen t of the reference utility and always equal to one another, the risk p remium to be independent of reference-level utility, absolute indexes of income inequality to be reference free, and social-welfare function als to satisfy invariance with respect to the choice of a common origi n. Translation homotheticity is also sufficient for Hicks' many-market consumer surplus measure to be a second-order approximation to dispos able surplus, compensating benefit, and equivalent benefit. If prefere nces are translation homothetic and appropriately quadratic, Hicks, ma ny-market consumer surplus measure is exact for these welfare measures .