A note on decisions under uncertainty: The impact of the choice of the welfare measure

The paper addresses the question, how policy decisions under uncertainty de pend on the underlying welfare concept. We study three different welfare me asures: The first is directly based on the ex ante (expected) utility of a representative consumer whereas the second relies on an ex ante and the thi rd on an ex post valuation of policy changes compared to the status quo. We show that decisions based on these measures coincide if and only if risk-n eutral expected utility maximization is applied. Differences between the de cisions are analyzed for both, risk-averse expected utility maximization an d the MaxiMin criterion. For risk-averse decision makers, differences betwe en the first and the second concept arise if the absolute risk-aversion of the decision maker is not constant in income. For risk-aversion and the Max iMin criterion, the effort levels to provide a public good based on an opti mization of ex post utility changes exceed those based on the first or seco nd concept. Implications for environmental policy decisions based on the co ncepts of abatement costs and benefits from abatement are discussed.