Economics of Well-Being (Post-Welfarist Economics)

Welfare economics seeks to evaluate the social acceptability of alternative economic choices by examining their effects on the sum total of individual utilities. A limitation of this approach is that utility functions are ordinal concepts; their use is based on the assumption that individuals can rank alternatives but they cannot take into consideration the intensity of satisfaction they derive from them. Consequently, the utilities of individuals or groups cannot be directly measured and hence compared. For example, the utility of a corporate executive cannot be compared with the utility of a rural dairy farmer. This noncommensurability restricts the types of problems welfare economists examine so that concerns such as justice and equity are largely ignored. Thus, while the level of income enters into a welfare ...