The welfare definition of economics is an attempt by

Alfred Marshall Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist, and was one of the most influential economists of his time. His book '' Principles of Economics'' (1890) was the dominant economic textbook in England for many years. I ...

, a pioneer of

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

, to redefine his field of study. This definition expands the field of economic science to a larger study of humanity. Specifically, Marshall's view is that economics studies all the actions that people take in order to achieve economic welfare. In the words of Marshall, "man earns money to get material welfare." Others since Marshall have described his remark as the "welfare definition" of economics. This definition enlarged the scope of economic science by emphasizing the study of wealth and humanity together, rather than wealth alone. In his widely read textbook, '' Principles of Economics'', published in 1890, Marshall defines economics as follows:

Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being.

Functions

The following are the implications of this definition: #

Economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

is a study of humankind. # Human life has several aspects: social, religious, economic and political—but economics is concerned only with the economic aspect of life. # Promotion of welfare is the ultimate goal, but the term welfare is used in a narrow sense to meet material welfare only. According to Edwin Cannan, "the aim of political economy or Economics is the explanation of the general causes on which the material welfare of human beings depend". Marshall clearly explains that economic activity is different from other activity. For example, : ''If a student visits a friend who is ill, it is a

social Social organisms, including human(s), live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary or not. Etymology The word "social" derives from ...

activity,'' : ''If a person give his vote in an election, it is a

political Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that studi ...

activity.'' : ''If a person goes to church/temple it is a

religious Religion is usually defined as a social- cultural system of designated behaviors and practices, morals, beliefs, worldviews, texts, sanctified places, prophecies, ethics, or organizations, that generally relates humanity to supernatur ...

activity.'' Marshall defines economic activity as separate from the above activities. A farmer who toils in the field, or a worker on an assembly, are performing an economic activity: they work to increase their material welfare (primarily by earning

money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money ar ...

). Money buys goods or services that satisfy wants. In other words, economics deals with effort, wants, and the satisfaction of those wants.

Impact on economics

Followers in the neoclassical tradition, such as

William Beveridge William Henry Beveridge, 1st Baron Beveridge, (5 March 1879 – 16 March 1963) was a British economist and Liberal politician who was a progressive and social reformer who played a central role in designing the British welfare state. His 1942 ...

and

Arthur Pigou Arthur Cecil Pigou (; 18 November 1877 – 7 March 1959) was an English economist. As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chair ...

have continued to define economics in terms of material economic welfare. According to Pigou, "the range of enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the

measuring rod A measuring rod is a tool used to physically measure lengths and survey areas of various sizes. Most measuring rods are round or square sectioned; however, they can also be flat boards. Some have markings at regular intervals. It is likely th ...

Criticism

Marshall’s definition has been criticized by more recent economists, including

Lionel Robbins Lionel Charles Robbins, Baron Robbins, (22 November 1898 – 15 May 1984) was a British economist, and prominent member of the economics department at the London School of Economics (LSE). He is known for his leadership at LSE, his proposed de ...

. Robbins' criticisms include: (1)Narrows down the scope of economics. Marshall distinguishes between material and non-material welfare, and confines economics to the study of material welfare. Robbins feels that economists should r attention to material welfare. There are things that are "non-material" but they promote human welfare. Robbins cites “the services of doctors, lawyers, teachers, dancers, engineers, professors". These goods "satisfy our wants and are scarce in supply”. Some economists feel that Marshall's definition of "material" includes both goods and services, and that Robbins is either misreading Marshall's text, or creating a

straw man A straw man (sometimes written as strawman) is a form of argument and an informal fallacy of having the impression of refuting an argument, whereas the real subject of the argument was not addressed or refuted, but instead replaced with a false o ...

argument. (2) Assumes equivalency between welfare and economic activity. For Robbins, there are economic activities which do not promote human welfare. For example, the sale of

cocaine Cocaine (from , from , ultimately from Quechua: ''kúka'') is a central nervous system (CNS) stimulant mainly used recreationally for its euphoric effects. It is primarily obtained from the leaves of two Coca species native to South Am ...

heroin Heroin, also known as diacetylmorphine and diamorphine among other names, is a potent opioid mainly used as a recreational drug for its euphoric effects. Medical grade diamorphine is used as a pure hydrochloride salt. Various white and bro ...

. Here Robbins says, “Why talk of welfare at all? Why not throw away the mask altogether”. (3) It is a vague concept. According to Robbins, “welfare” is a vague concept to use to define economics because it is subjective. Economics is a quantitative science; but welfare cannot be quantitatively measured, and two persons cannot agree on what creates or improves welfare. (4) It involves value judgement. Finally the word “welfare” in Marshall’s definition brings

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

to the realm of ethics. Robbins would prefer that economics remain neutral in assessing the results of economic transactions..

Economic welfare

Broadly, economic welfare is the level of prosperity and

standard of living Standard of living is the level of income, comforts and services available, generally applied to a society or location, rather than to an individual. Standard of living is relevant because it is considered to contribute to an individual's quality ...

of either an individual or a group of persons. In the field of

, it specifically refers to

utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosophe ...

gained through the achievement of material

goods and services Goods are items that are usually (but not always) tangible, such as pens, physical books, salt, apples, and hats. Services are activities provided by other people, who include architects, suppliers, contractors, technologists, teachers, doc ...

. In other words, it refers to that part of 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 such as food and shelter. Social security may either be synonymous with welfare, or refer specifical ...

that can be fulfilled through economic activity. According to Roefie Hueting, welfare is dependent on factors like employment,

income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes ec ...

, labour conditions, leisure time, production and the scarce possible uses of the environmental functions.Hueting, R. (2011)
''The future of the Environmentally sustainable national income''

Ökologisches Wirtschaften ''Ökologisches Wirtschaften'' is an academic journal for socioeconomics and ecological economics. The journal was introduced in 1986 by (IÖW) and (VÖW). Since 1996 it has been published four times a year with a focus on a specific topic b ...

, 4/2011, 30-35 Economic welfare is measured in different ways, depending on the preferences of those measuring it. Factors used to measure the economic welfare of a population, include: GDP,

literacy Literacy in its broadest sense describes "particular ways of thinking about and doing reading and writing" with the purpose of understanding or expressing thoughts or ideas in Writing, written form in some specific context of use. In other wo ...

, access to health care, and assessments of

environmental A biophysical environment is a biotic and abiotic surrounding of an organism or population, and consequently includes the factors that have an influence in their survival, development, and evolution. A biophysical environment can vary in scal ...

quality.

References

{{DEFAULTSORT:Welfare Definition Of Economics Welfare economics

Functions

Impact on economics

Criticism

Economic welfare

See also

References