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Welfare economics is a branch of economics that uses
microeconomic Microeconomics is a branch of mainstream economics that studies the behavior of individuals and Theory of the firm, firms in making decisions regarding the allocation of scarcity, scarce resources and the interactions among these individuals a ...
techniques to evaluate
well-being Well-being, also known as ''wellness'', ''prudential value'' or ''quality of life'', refers to what is intrinsically valuable relative ''to'' someone. So the well-being of a person is what is ultimately good ''for'' this person, what is in the ...
(welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics gives rise to the field of
public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency In , economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being ...
, the study of how government might intervene to improve
social welfare Welfare (or commonly, social welfare) is a type of government support intended to ensure that members of a society can meet basic human needs Maslow's hierarchy of needs is an idea in psychology Psychology is the science of mind and ...
. Welfare economics also provides the theoretical foundations for particular instruments of public economics, including
cost–benefit analysis Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives used to determine options which provide the best approach to achieving benefits while ...
, while the combination of welfare economics and insights from
behavioral economics Behavioral economics (also, behavioural economics) studies the effects of psychological Psychology is the scientific Science () is a systematic enterprise that Scientific method, builds and organizes knowledge in the form of Te ...
has led to the creation of a new subfield, behavioral welfare economics. The field of welfare economics is associated with two
fundamental theorems In mathematics, a fundamental theorem is a theorem which is considered to be central and conceptually important for some topic. For example, the fundamental theorem of calculus gives the relationship between differential calculus and integral calcul ...
. The first states that given certain assumptions, competitive markets produce ( Pareto) efficient outcomes; it captures the logic of Adam Smith's
invisible hand The invisible hand is an economic concept that describes the unintended greater social benefits and public good brought about by individuals acting in their own self-interests. The concept was first introduced by Adam Smith Adam Smith ...

invisible hand
. The second states that given further restrictions, any Pareto efficient outcome can be supported as a competitive market equilibrium. Thus a social planner could use a social welfare function to pick the most equitable efficient outcome, then use lump sum transfers followed by competitive trade to bring it about. Because of welfare economics' close ties to
social choice theory Social choice theory or social choice is a theoretical A theory is a rational Rationality is the quality or state of being rational – that is, being based on or agreeable to reason Reason is the capacity of consciously making sense o ...
,
Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem {{Redirect category shell, 1= {{R from other capitalisation ...
{{Redirect category shell, 1= {{R from other capitalisation ...
is sometimes listed as a third fundamental theorem. A typical methodology begins with the derivation (or assumption) of a
social welfare functionIn welfare economics, a social welfare function is a function (mathematics), function that ranks social states (alternative complete descriptions of the society) as less desirable, more desirable, or indifference curve, indifferent for every possible ...
, which can then be used to rank economically feasible allocations of resources in terms of the social welfare they entail. Such functions typically include measures of economic efficiency and equity, though more recent attempts to quantify social welfare have included a broader range of measures including
economic freedom Economic freedom, or economic liberty, is the ability of people of a society to take economic actions. This is a term used in economic and policy debate Policy debate is a form of debate competition in which teams of two advocate for and again ...
(as in the
capability approach The capability approach (also referred to as the capabilities approach) is a normative approach to human welfare Welfare (or commonly, social welfare) is a type of government support intended to ensure that members of a society can meet Basi ...
).


Approaches


Cardinal utility

The early ''
Neoclassical Neoclassical or neo-classical may refer to: * Neoclassicism or New Classicism, any of a number of movements in the fine arts, literature, theatre, music, language, and architecture beginning in the 17th century ** Neoclassical architecture, an arc ...
approach'' was developed by Edgeworth,
Sidgwick
Sidgwick
,
Marshall Marshall may refer to: Places United States * Marshall, Alaska * Marshall, Arkansas * Marshall, California * Lotus, California, former name Marshall * Marshall Pass, a mountain pass in Colorado * Marshall, Illinois * Marshall, Indiana * Marshall, ...

Marshall
, and Pigou. It assumes the following: * Utility is
cardinal Cardinal or The Cardinal may refer to: Christianity * Cardinal (Catholic Church), a senior official of the Catholic Church * Cardinal (Church of England), two members of the College of Minor Canons of St. Paul's Cathedral Navigation * Cardin ...
, that is, scale-measurable by observation or judgment. * Preferences are exogenously given and stable. * Additional consumption provides smaller and smaller increases in utility (diminishing
marginal utility In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behavio ...
). * All individuals have interpersonally commensurable utility functions (an assumption that Edgeworth avoided in his ''Mathematical Psychics''). With these assumptions, it is possible to construct a
social welfare functionIn welfare economics, a social welfare function is a function (mathematics), function that ranks social states (alternative complete descriptions of the society) as less desirable, more desirable, or indifference curve, indifferent for every possible ...
simply by summing all the individual utility functions. Note that such a measure would still be concerned with the distribution of income ( distributive efficiency) but not the distribution of final utilities. In normative terms, such authors were writing in the
Benthamite Jeremy Bentham (; 15 February 1748
ld Style and New Style dates, O.S. 4 February 1747 LD may refer to: Arts and entertainment Film and television *Lorraine "L.D." Delacorte, a character on the TV series ''Degrassi ''Degrassi'' is a Canadian teen drama In film A film, also called a movie, motion picture or moving pi ...
– 6 June 1832) was an English philosopher, jurist, and social reformer regarded as the founder of modern utilitarianism. Bentham defined as the "fundamen ...

Benthamite
tradition.


Ordinal utility

The ''New Welfare Economics'' approach is based on the work of
Pareto
Pareto
,
Hicks Hicks, also spelled Hickes, is a surname. See also Hix. Surname A (... Hicks) * Aaron Hicks (born 1989), American professional baseball center fielder * Adam Hicks (born 1992), American actor, rapper, singer, and songwriter * Akiem Hicks (born ...

Hicks
, and
Kaldor
Kaldor
. It explicitly recognizes the differences between the efficiency aspect of the discipline and the distribution aspect and treats them differently. Questions of efficiency are assessed with criteria such as
Pareto efficiency Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after V ...
and the Kaldor–Hicks compensation tests, while questions of income distribution are covered in social welfare function specification. Further, efficiency dispenses with cardinal measures of utility, replacing it with
ordinal utility In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour ...
, which merely ranks commodity bundles (with an
indifference-curve
indifference-curve
map, for example).


Criteria


Efficiency

Situations are considered to have distributive efficiency when goods are distributed to the people who can gain the most utility from them.
Pareto efficiency Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after V ...
is a useful efficiency goal that is standard in economics. A situation is Pareto-efficient only if no individual can be made better off without making someone else worse off. An example of an inefficient situation would be if Smith owns an apple but would prefer to consume an orange while Jones owns an orange but would be prefer to consume an apple. Both could be made better off by trading. A pareto-efficient state of affairs can only come about if four criteria are met: * The marginal rates of substitution in consumption for any two goods are identical for all consumers. We cannot reallocate goods between two consumers and make both happier. * The
marginal rate of transformation Marginal may refer to: * Marginal (album), ''Marginal'' (album), the third album of the Belgian rock band Dead Man Ray, released in 2001 * Marginal (manga), ''Marginal'' (manga) * ''El Marginal'', Argentine TV series * Marginal seat or marginal c ...
in production for any two goods is identical for all producers of those two goods. We cannot reallocate production between two producers and increase total output. * The marginal physical product of a factor input (e.g. labor) must be the same for all producers of a good. We cannot reduce production cost by reallocating production between two producers. * The marginal rates of substitution in consumption equal the marginal rates of transformation in production for any pair of goods. Producers cannot make consumers happier by producing more of one good and less of the other. There are a number of conditions that lead to inefficiency. They include: * Imperfect market structures such as monopoly,
monopsony In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behavio ...
, oligopoly,
oligopsony An oligopsony (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southeast Europe. Its population is appro ...
, and
monopolistic competition Monopolistic competition is a type of imperfect competitionIn economics, imperfect competition refers to a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market, ...
. * Factor allocation inefficiencies in
production theory basics Production is the process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). It is the act of creating an output Output may refer to: * The information produced by a c ...
. *
Externalities In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plan ...

Externalities
. * Asymmetric information, including
principal–agent problem The principal–agent problem, in political science Political science is the scientific study of politics Politics (from , ) is the set of activities that are associated with making decisions In psychology, decision-making (also sp ...
s. *
Long run In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour ...
declining average costs in a
natural monopoly A natural monopoly is a monopoly A monopoly (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southea ...

natural monopoly
. * Taxes and tariffs. * Government restrictions on prices and quantities sold and other regulation resulting from
government failure Government failure, in the context of public economics Public economics (or economics of the public sector) is the study of government policy through the lens of economic efficiency In , economic efficiency is, roughly speaking, a situation in w ...
. Note that if one of these conditions leads to inefficiency, another condition might help by counteracting it. For example, if a pollution externality leads to overproduction of tires, a tax on tires might restore the efficient level of production. A condition inefficient in the "first-best" might be desirable in the second-best. To determine whether an activity is moving the economy towards Pareto efficiency, two compensation tests have been developed. Policy changes usually help some people while hurting others, so these tests ask what would happen if the winners were to compensate the losers. Using the ''Kaldor criterion'', the change is desirable if the maximum amount the winners would be willing to pay is greater than the minimum the losers would accept. Under the ''Hicks criterion'', the change is desirable if the maximum the losers would be willing to offer the winners to prevent the change is less than the minimum the winners would accept as a bribe to give up the change. The Hicks compensation test is from the losers' point of view; the Kaldor compensation test is from the winners'. If both conditions are satisfied, the proposed change will move the economy toward Pareto optimality. This idea is known as
Kaldor–Hicks efficiency A Kaldor–Hicks improvement, named for Nicholas Kaldor and John Hicks, is an economic re-allocation of resources among people that captures some of the intuitive appeal of a Pareto efficiency, Pareto improvement, but has less stringent criteria ...
. If the two conditions disagree, that yields the
Scitovsky paradox The Scitovsky paradox is a paradox in welfare economics which is resolved by stating that there is no increase in social welfare by a return to the original part of the losers. It is named after the Hungary, Hungarian born United States, American ec ...
.


Equity

There are many combinations of consumer utility, production mixes, and factor input combinations consistent with efficiency. In fact, there are an infinity of consumption and production equilibria that yield Pareto optimal results. There are as many optima as there are points on the aggregate
production–possibility frontierA production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB), or Transformation curve/boundary/frontier is a curve which shows various combinations of the amounts of two goods which can be pr ...
. Hence, Pareto efficiency is a necessary, but not a sufficient condition for social welfare. Each Pareto optimum corresponds to a different income distribution in the economy. Some may involve great inequalities of income. So how do we decide which Pareto optimum is most desirable? This decision is made, either tacitly or overtly, when we specify the
social welfare functionIn welfare economics, a social welfare function is a function (mathematics), function that ranks social states (alternative complete descriptions of the society) as less desirable, more desirable, or indifference curve, indifferent for every possible ...
. This function embodies value judgements about interpersonal utility. The social welfare function shows the relative importance of the individuals that comprise society. A utilitarian welfare function (also called a
Bentham
Bentham
ite welfare function) sums the utility of each individual in order to obtain society's overall welfare. All people are treated the same, regardless of their initial level of utility. One extra unit of utility for a starving person is not seen to be of any greater value than an extra unit of utility for a millionaire. At the other extreme is the Max-Min, or Rawlsian utility function. According to the Max-Min criterion, welfare is maximized when the utility of those society members that have the least is the greatest. No economic activity will increase social welfare unless it improves the position of the society member that is the worst off. Most economists specify social welfare functions that are intermediate between these two extremes. The social welfare function is typically translated into social
indifference curve In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behavi ...

indifference curve
s so that they can be used in the same graphic space as the other functions that they interact with. A utilitarian social indifference curve is linear and downward sloping to the right. The Max-Min social indifference curve takes the shape of two straight lines joined so as they form a 90-degree angle. A social indifference curve drawn from an intermediate social welfare function is a curve that slopes downward to the right.
The intermediate form of social indifference curve can be interpreted as showing that as inequality increases, a larger improvement in the utility of relatively rich individuals is needed to compensate for the loss in utility of relatively poor individuals. A crude social welfare function can be constructed by measuring the subjective dollar value of goods and services distributed to participants in the economy (''See also''
Consumer surplus In mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics ...
, Consumer welfare standard).


Fundamental theorems

The field of welfare economics is associated with two fundamental theorems. The first states that given certain assumptions, competitive markets (price equilibria with transfers, e.g. Walrasian equilibria) produce
Pareto efficient Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after V ...
outcomes. The assumptions required are generally characterised as "very weak". More specifically, the existence of competitive equilibrium implies both
price-taking In economics and particularly in industrial organization, market power is the ability of a theory of the firm, firm to profitably raise the market price of a good or service over marginal cost. In Perfect competition, perfectly competitive markets, ...
behaviour and
complete market In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant l ...
s, but the only additional assumption is the local non-satiation of agents'
preferences In psychology Psychology is the scientific Science () is a systematic enterprise that builds and organizes knowledge Knowledge is a familiarity or awareness, of someone or something, such as facts A fact is an occurrence in t ...
– that consumers would like, at the margin, to have slightly more of any given good. The first fundamental theorem is said to capture the logic of Adam Smith's
invisible hand The invisible hand is an economic concept that describes the unintended greater social benefits and public good brought about by individuals acting in their own self-interests. The concept was first introduced by Adam Smith Adam Smith ...

invisible hand
, though in general there is no reason to suppose that the "best" Pareto efficient point (of which there are a set) will be selected by the market without intervention, only that some such point will be. The second fundamental theorem states that given further restrictions, any Pareto efficient outcome can be supported as a competitive market equilibrium. These restrictions are stronger than for the first fundamental theorem, with of preferences and production functions a sufficient but not necessary condition. A direct consequence of the second theorem is that a benevolent social planner could use a system of lump sum transfers to ensure that the "best" Pareto efficient allocation was supported as a competitive equilibrium for some set of prices. More generally, it suggests that redistribution should, if possible, be achieved without affecting prices (which should continue to reflect relative
scarcity Scarcity as an economic concept "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each econo ...
), thus ensuring that the final (post-trade) result is efficient. Put into practice, such a policy might resemble
predistribution Pre-distribution (or Predistribution) is the idea that the state should try to prevent inequalities occurring in the first place rather than ameliorating them via tax and benefits once they have occurred, as occurs under redistribution. The term i ...
. Because of welfare economics' close ties to
social choice theory Social choice theory or social choice is a theoretical A theory is a rational Rationality is the quality or state of being rational – that is, being based on or agreeable to reason Reason is the capacity of consciously making sense o ...
,
Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem {{Redirect category shell, 1= {{R from other capitalisation ...
{{Redirect category shell, 1= {{R from other capitalisation ...
is sometimes listed as a third fundamental theorem.


Social welfare maximization

Utility functions can be derived from the points on a contract curve. Numerous utility functions can be derived, one for each point on the production possibility frontier (PQ in the diagram above). A social utility frontier (also called a grand utility frontier) can be obtained from the outer envelope of all these utility functions. Each point on a social utility frontier represents an efficient allocation of an economy's resources; that is, it is a Pareto optimum in factor allocation, in production, in consumption, and in the interaction of production and consumption (supply and demand). In the diagram below, the curve MN is a social utility frontier. Point D corresponds with point C from the earlier diagram. Point D is on the social utility frontier because the marginal rate of substitution at point C is equal to the marginal rate of transformation at point A. Point E corresponds with point B in the previous diagram, and lies inside the social utility frontier (indicating inefficiency) because the MRS at point C is not equal to the MRT at point A.
Although all the points on the grand social utility frontier are Pareto efficient, only one point identifies where social welfare is maximized. Such point is called "the point of bliss". This point is Z where the social utility frontier MN is tangent to the highest possible social
indifference curve In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behavi ...

indifference curve
labelled SI.


Criticisms

Some, such as economists in the tradition of the
Austrian School The Austrian School is a heterodox In religion, heterodoxy (from Ancient Greek Ancient Greek includes the forms of the Greek language used in ancient Greece and the classical antiquity, ancient world from around 1500 BC to 300 BC. It ...
, doubt whether a
cardinal Cardinal or The Cardinal may refer to: Christianity * Cardinal (Catholic Church), a senior official of the Catholic Church * Cardinal (Church of England), two members of the College of Minor Canons of St. Paul's Cathedral Navigation * Cardin ...
utility function, or cardinal social welfare function, is of any value. The reason given is that it is difficult to aggregate the utilities of various people that have differing marginal utility of money, such as the wealthy and the poor. Also, the economists of the Austrian School question the relevance of Pareto optimal allocation considering situations where the framework of means and ends is not perfectly known, since neoclassical theory always assumes that the ends-means framework is perfectly defined. The value of
ordinal utility In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour ...
functions has been questioned. Economists have proposed other means of
measuring well-being Quality of life (QOL) is defined by the World Health Organization The World Health Organization (WHO) is a specialized agency of the United Nations United Nations Specialized Agencies are autonomous organizations working with the United ...
as an alternative to price indices like
willingness to pay In behavioral economics Behavioral economics (also, behavioural economics) studies the effects of psychological Psychology is the scientific Science () is a systematic enterprise that Scientific method, builds and organizes ...
using revealed or stated preference method. This includes
subjective well-being Subjective well-being (SWB) is a self-reported measure of well-being Well-being, also known as ''wellness'', ''prudential value'' or ''quality of life'', refers to what is intrinsically valuable relative ''to'' someone. So the well-being of a ...
functions based on individuals' ratings of their happiness or life satisfaction rather than on their preferences. Price-based measures are seen as promoting
consumerism Consumerism is a social Social organisms, including humans, live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary/involuntary. Etymology ...
and
productivism Productivism or growthism is the belief that measurable productivity and growth are the purpose of human organization (e.g., work), and that "more production is necessarily good". Critiques of productivism center primarily on the limits to gr ...
by many. It is possible to do welfare economics without the use of prices; however, this is not always done. Value assumptions explicit in the social welfare function used and implicit in the efficiency criterion chosen tend to make welfare economics a
normative Normative generally means relating to an evaluative standard. Normativity is the phenomenon in human societies of designating some actions or outcomes as good or desirable or permissible and others as bad or undesirable or impermissible. A Norm (p ...
and perhaps subjective field. This can make it controversial. However, perhaps most significant of all are concerns about the limits of a utilitarian approach to welfare economics. According to this line of argument, utility is not the only thing that matters and so a comprehensive approach to welfare economics should include other factors. The
capability approach The capability approach (also referred to as the capabilities approach) is a normative approach to human welfare Welfare (or commonly, social welfare) is a type of government support intended to ensure that members of a society can meet Basi ...
is a theoretical framework that entails two core normative claims: first, the claim that the freedom to achieve well-being is of primary moral importance, and second, that freedom to achieve well-being is to be understood in terms of people's capabilities, that is, their real opportunities to do and be what they have reason to value.


See also

*
Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem#REDIRECT Arrow's impossibility theorem {{Redirect category shell, 1= {{R from other capitalisation ...
{{Redirect category shell, 1= {{R from other capitalisation ...
*
Compensation principle In welfare economics Welfare economics is a branch of economics that uses microeconomics, microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics ...
*
Consumer surplus In mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics ...
*
Deadweight loss Deadweight loss, also known as excess burden, is a measure of lost economic efficiency In , economic efficiency is, roughly speaking, a situation in which nothing can be improved without something else being hurt. Depending on the context, it is ...
*
Distribution (economics) In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant ...
*
Economic surplus In mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics ...
*
Equity (economics) Equity, or economic equality, is the concept or idea of fairness in economics, particularly in regard to taxation or welfare economics. More specifically, it may refer to equal opportunity, equal life chances regardless of identity, to provide al ...
*
Feminist economics Feminist economics is the critical study of economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant ...
*
Gini coefficient In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science ...

Gini coefficient
*
Happiness economics The economics of happiness or happiness economics is the theoretical, qualitative and quantitative study of happiness The term ''happiness'' is used in the context of Mental health, mental or emotional states, including positive or Pleasu ...
*
Humanistic economics Humanistic economics is a distinct pattern of economic thought Economics () is the social science that studies how people interact with value; in particular, the production Production may be: Economics and business * Production (economi ...
*
Income inequality metrics In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 190 ...
*
Involuntary unemployment Involuntary unemployment occurs when a person is unemployed Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employme ...

Involuntary unemployment
*
Justice (economics)Justice Justice, one of the four cardinal virtues, by Vitruvio Alberi, 1589–1590. Fresco, corner of the vault, studiolo of the Virgin of Mercy, Madonna of Mercy, Palazzo Altemps, Rome Justice, in its broadest sense, is the principle that peopl ...
*
Kaldor–Hicks efficiency A Kaldor–Hicks improvement, named for Nicholas Kaldor and John Hicks, is an economic re-allocation of resources among people that captures some of the intuitive appeal of a Pareto efficiency, Pareto improvement, but has less stringent criteria ...
*
Lorenz curve In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant ...

Lorenz curve
*
Pareto efficiency Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after V ...
*
Public interest The public interest is "the welfare or well-being Well-being, also known as ''wellness'', ''prudential value'' or ''quality of life'', refers to what is intrinsically valuable relative ''to'' someone. So the well-being of a person is wha ...
*
Social safety net The social safety net (SSN) consists of non-contributory assistance existing to improve lives of vulnerable families and individuals experiencing poverty and destitution. Examples of SSNs are previously-contributory social pensions, in-kind and fo ...
*
Social welfare functionIn welfare economics, a social welfare function is a function (mathematics), function that ranks social states (alternative complete descriptions of the society) as less desirable, more desirable, or indifference curve, indifferent for every possible ...
*
Universal basic income Universal basic income (UBI) is a sociopolitical financial transfer concept in which all citizens of a given population regularly receive a legally stipulated and equal financial grant paid by the government without a means test A means te ...

Universal basic income
*
Welfare state The welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity Equal o ...
*
World Happiness Report The World Happiness Report is a publication of the United Nations The United Nations (UN) is an intergovernmental organization aiming to maintain international peace and international security, security, develop friendly relations among ...

World Happiness Report


Notes


References

* * * * * *


Further reading

* Arrow, Kenneth J. (1951, 2nd ed., 1963). ''
Social Choice and Individual Values #REDIRECT Social Choice and Individual Values #REDIRECT Social Choice and Individual Values#REDIRECT Social Choice and Individual Values Kenneth Arrow's monograph ''Social Choice and Individual Values'' (1951, 2nd ed., 1963) and a theorem within ...
'', Yale University Press, New Haven. * Arrow, Kenneth J., and
Gérard Debreu Gérard Debreu (; 4 July 1921 – 31 December 2004) was a French-born economist An economist is a professional and practitioner in the social science Social science is the branch A branch ( or , ) or tree branch (sometimes refer ...
ed., 2002. ''Landmark Papers in General Equilibrium Theory, Social Choice and Welfare''. Edward Elgar Publishing, . Description and table o
contents.
* Atkinson, Anthony B. (1975). ''The Economics of Inequality'',
Oxford University Press Oxford University Press (OUP) is the university press A university press is an academic publishing Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for fre ...

Oxford University Press
, London. * Atkinson, Anthony B. (2012). ''Optimum population, welfare economics, and inequality'',
Oxford University Press Oxford University Press (OUP) is the university press A university press is an academic publishing Publishing is the activity of making information, literature, music, software and other content available to the public for sale or for fre ...

Oxford University Press
, London. * Bator, Francis M. (1957). "The Simple Analytics of Welfare Maximization", ''American Economic Review'', 47(1),
pp. 22–59
* Calsamiglia, Xavier, and Alan Kirman (1993). "A Unique Informationally Efficient and Decentralized Mechanism with Fair Outcomes", ''Econometrica'', 61(5),
pp. 1147–72
* Chipman, John S., and James C. Moore (1978). "The New Welfare Economics 1939–1974," ''International Economic Review'', 19(3),
pp. 547–84
* Mishan, E. J. (1980). "The New Welfare Economics: An Alternative View", ''International Economic Review'', 21(3)
pp. 691–705
* Feldman, Allan M. (1987). "equity," ''
The New Palgrave: A Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictiona ...
'', v. 2, pp. 183–84. * Feldman, Allan M., and Roberto Serrano,
980 Year 980 ( CMLXXX) was a leap year starting on Thursday A leap year starting on Thursday is any year with 366 days (i.e. it includes 29 February) that begins on Thursday Thursday is the day of the week between Wednesday Wednesday is the ...
2006. ''Welfare Economics and Social Choice Theory'', 2nd ed. ,
Arrow-searchable chapter previews.
*, (1957; rev. ed., 1968). ''Theoretical Welfare Economics'', Cambridge, UK: Cambridge University Press. * Harberger, Arnold C. (1971) "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay", ''Journal of Economic Literature'', 9(3),
pp. 785–97
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