Re: Dan Bell's Welfare Options

[Keith Wilde <kwilde@magi.com>]

Dan asked "What would economists say about defining General Welfare
>in the following way:
>..........................
>I think that #2 clearly benefits the General Welfare
>because no one is worse off and many are better off.
>
>#1 is less clear, but some might say it benefits the
>General Welfare because no one is worse off and many
>are better off.
>
>#3 and #4 may be said not to benefit the General
>Welfare because some are worse off. Here we get into
>the moral "should" issues, like, are the some who
>are worse off those who "should not have been" as
>well off as they were before? Are they still better
>off than the average person?

My response, which I believe is the standard answer:

#3 and #4 are out of bounds for economic analysis, by the conventions of
welfare economics which hold that unless losers are compensated fully, no
improvement in welfare can be confidently asserted.

#2 is better than #1 on the presumption that the higher marginal utility of
many small winners will add up to a greater total than the lower marginal
utility of a few big winners.


Keith Wilde
Canada Pension Plan
Ottawa
kwilde@magi.com
613 990-8125 (office)
613 747-6847 (res)