Pareto Criterion and Welfare Theorems

(not even under construction)

…

Random Links and Notes

Martin Leschke. A Critique of Welfare Economics. In Order Ethics: An Ethical Framework for the Social Market Economy, 2016. [1]

Scitovsky, Tibor. “A Note on Welfare Propositions in Economics, 9 REV. ECON.” Stud 77 (1941): 405-07.

Stiglitz https://www.nber.org/system/files/working_papers/w3641/w3641.pdf

Non-convex economies … https://cadmus.eui.eu/bitstream/handle/1814/22893/1987_EUIWP_265.pdf?sequence=1 … https://www.jstor.org/stable/pdf/1885061.pdf …

Sen https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=lecture+notes+on+Welfare+Economics+and+Social+Choice+Theory&btnG=

Mas-Colell, Whinston and Green (1995), Microeconomic Theory

Quint, Some Beautiful Theorems with Beautiful Proofs

Sage AI

Some influential academic contributions to the debate over the value-laden nature of the Pareto criterion, ordered by time:

1. Lionel Robbins, “An Essay on the Nature and Significance of Economic Science” (1932): In this influential book, Robbins argues that economics is a value-free science that is concerned with the efficient allocation of scarce resources, and that the Pareto criterion is a technical criterion that measures the extent to which resources are being used to their fullest potential. Robbins’s view was influential in shaping the neoclassical approach to welfare economics.

2. Amartya Sen, “Collective Choice and Social Welfare” (1970): In this book, Sen argues that the Pareto criterion is inadequate as a criterion of social welfare because it does not take into account the distributional consequences of policy changes. He proposes an alternative criterion, the “social welfare function,” which incorporates concerns about the distribution of benefits and harms among individuals. Sen’s book was influential in laying the groundwork for the development of social choice theory, which seeks to provide a more comprehensive framework for analyzing social welfare.

3. Kenneth Arrow, “Social Choice and Individual Values” (1951): In this seminal paper, Arrow shows that there is no social welfare function that satisfies a set of reasonable conditions, including the Pareto criterion, and does not lead to contradictory results. Arrow’s theorem has had a profound influence on the development of social choice theory, and has led to a rethinking of the role of value judgments in welfare economics.

4. James Buchanan, “Positive Economics, Welfare Economics, and Political Economy” (1964): In this paper, Buchanan argues that welfare economics should be viewed as a branch of political economy rather than as a purely technical discipline. He emphasizes the importance of considering the political and institutional context in which economic policy decisions are made, and argues that the Pareto criterion is inadequate as a criterion of social welfare because it ignores the distributional consequences of policy changes.

5. John Rawls, “A Theory of Justice” (1971): In this book, Rawls proposes a theory of justice that emphasizes the importance of fairness and equality in social welfare. He argues that the Pareto criterion is inadequate as a criterion of social welfare because it does not take into account the distributional consequences of policy changes, and proposes an alternative criterion, the “difference principle,” which requires that social and economic inequalities be arranged so as to benefit the least advantaged members of society. Rawls’s theory has had a profound influence on contemporary political philosophy and has contributed to a rethinking of the role of value judgments in welfare economics.

---

[1]

Many approaches to business ethics tend to blame ethical problems on unethical individuals. Accordingly, theorists who subscribe to them usually propose to solve these problems through interventionist measures, i.e. against the market. Order ethicists have adopted a different strategy. They aimed to devise ethical systems for the market. The idea behind Order Politics is not to intervene directly into the market, but to provide a regulatory institutional framework in which markets function properly and for mutual benefit. Similarly, Order Ethics asks how markets can be regulated in order to bring to fruition moral ideals.