Econometrica: May, 2002, Volume 70, Issue 3

A Theory of Diversity

https://doi.org/10.1111/1468-0262.00321
p. 1155-1198

Klaus Nehring, Clemens Puppe

How can diversity be measured? What does it mean to value biodiversity? Can we assist Noah in constructing his preferences? To address these questions, we propose a multi‐attribute approach under which the diversity of a set of species is the sum of the values of all attributes possessed by some species in the set. We develop the basic intuitions and requirements for a theory of diversity and show that the multi‐attribute approach satisfies them in a flexible yet tractable manner.