Munich Personal RePEc Archive

A Consumer Model and Social Welfare Based on the Writings of Shibani (750-805 AD, 131-189 AH)

Ghassan, Hassan B. (2015): A Consumer Model and Social Welfare Based on the Writings of Shibani (750-805 AD, 131-189 AH). Published in: PSL Quarterly Review , Vol. xx, No. Forthcoming 2016 (2016): pp. 1-27.

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Abstract

The novelty of Shibani’s earning model is its integration of Zakat and other social giving in the social welfare function, which makes the consumer utility a multi-dimensional devotional, material, ethical, social, Shariah-compliant function. In the model, the consumer’s income evolves increasingly from imperative earning that covers consumer’s basic needs, to recommended earning that covers basic needs of relatives; and to permissible earning that covers the poor’s needs. Accordingly, the model has imperative, recommended, and permissible utility. The rich consumer draws additional utility from Zakat spending in favor of the poor consumers. Based on the social solidarity, we show that the marginal earning depends on the first difference between the MPC of lower and upper social groups. The permissible marginal utility is related to the faith interaction and enhances the social utility as social transfer is paid to poor and needy groups.

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