Abstract
Welfare economics attempts to define and measure the ‘welfare’ of society as a whole. It tries to identify which economic policies lead to optimal outcomes, and, where necessary, to choose among multiple optima. This article answers three fundamental qsts with three fundamental theorems. In a competitive economy, will an equilibrium outcome be optimal? Can any optimal outcome be achieved by a modified market mechanism? Is there a reliable way to measure social welfare, or to derive the preferences of society from the preferences of individuals? The negative answer to the third question is partly overcome by the theory of implementation.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
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Feldman, A.M. (2008). Welfare Economics. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_1417-2
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DOI: https://doi.org/10.1057/978-1-349-95121-5_1417-2
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Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
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Chapter history
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Latest
Welfare Economics- Published:
- 31 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_1417-2
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Original
Welfare Economics- Published:
- 01 December 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_1417-1