Thinking about welfare economics – or not

I’ve been reading I.M.D.Little’s [amazon_link id=”0198281196″ target=”_blank” ]Critique of Welfare Economics[/amazon_link] (1950 originally – I have Andrew Sentance’s slight musty, rescued from his garage, 1973 paperback). He wrote: “There can be no significance in national-income comparisons unless a value judgement about changes in distribution is presupposed. But statisticians … do not, of course, wish to make any such presupposition.” He continues that they can tell us that the market value of consumption goods has increased, but cannot conclude that consumption has increased. “There is, after all, no such thing as consumption, the size of which can be measured.”

[amazon_image id=”0198281196″ link=”true” target=”_blank” size=”medium” ]A Critique of Welfare Economics[/amazon_image]

Winging its way to me now, courtesy of a recommendation by Martin Wolf, is [amazon_link id=”0521094461″ target=”_blank” ]Theoretical Welfare Economics[/amazon_link] by J de V Graaff (1957), which one contemporary review described as “an elegantly executed demolition of ordinary welfare theory.” I don’t need a lot of persuading about the demolition-worthiness of the theory but it does leave rather a huge question about (a) what we think we’re measuring with the national accounts and (b) what we think standard evaluations of public policy are telling us. The answer, of course, is that mostly we don’t think about it.

[amazon_image id=”0521094461″ link=”true” target=”_blank” size=”medium” ]Theoretical Welfare Economics[/amazon_image]

3 thoughts on “Thinking about welfare economics – or not

  1. It may be worth taking a look at “extrawelfarism” developed by health economics. It aims to measure health in QALYs or the like, and is increasingly having to deal with distributional issues. Happy to supply some references if interested.
    And keen to see where this overall questioning of WE takes you.

    Best wishes


    • Thankyou – I’d appreciate an overview reference if you have one. Not sure where I’ll get to, as this is hard stuff much cleverer people have grappled with!

  2. Back in the 50’s a welfare economist, Mishan was my Economics tutor from whom I learned a great deal, albeit then contaminated by the fashionable Keynsians of the time. Welfare did have its attractions. Notably, I think that Allen, a colleague of his, the leading statistician had his own serious doubts about the makeup and use of “national statistics” on the grounds that they were neither national nor statistics.

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