Talk:Welfare economics

Unnecessary introductory matter

It would be much better to go straight into the content of welfare economics and omit this introductory matter, which in any case is liable to confuse the reader. Welfare economics does not, in fact, have anything to say about equity, and it can better be presented as a purely technical examination of the means of pursuing the generally accepted economic objective of increasing welfare. Whether it is logical to refer to that as "normative" is a matter of word-play rather than of substance, and as such, better avoided. Nick Gardner 04:15, 12 November 2007 (CST)

Thanks for your comment on this. I think the equity/efficiency dichotomy is relatively well represented in most introductory economics textbooks. If welfare economics is defined as the economic objective of increasing welfare, and welfare=utility, it seems equity would be a necessary concern of welfare economics for reasons which I describe in the current version - namely, the diminishing marginal utility of wealth. I'd be interested in reading another treatment of the issue if there's one you'd recommend. If anyone else has a view on the issue, please share. Stephen Saletta 11:46, 12 November 2007 (CST)

Economic activity is generally taken to be the pursuit of individual economic welfare, and economic efficiency to be the measure of how well the economy does that. If you accept that, and argue that equity is to be achieved by redistributing wealth to those for whom it yields greater utility (ie welfare), then you cannot validly distinguish equity from efficiency because you have defined it as a subset of efficiency. (Unless, of course, you choose to adopt different definitions, in which case you must say what they are.)

I recommend avoiding going into that because it is a matter of semantics, not of substance. Of the various theorems of welfare economics, I know of none relating to equity. The theorems are what welfare economics is about and the article should, in my opinion, be devoted entirely to telling the reader about them.

As to academic treatments of the matter, you could go back to the beginning with Pigou's Economics of Welfare (http://www.econlib.org/library/NPDBooks/Pigou/pgEW.html), or for a concise treatment, go to Chapter 13 of Baumol's Economic Theory and Operations Analysis. I don't think you will find a discussion of equity in either (except, perhaps, in a footnote). For balance in drafting the article, you might well refer to I M D Little's Critique of Welfare Economics, but you can't use his arguments as a statement of the theory of welfare economics because they lead to the conclusion that the theory is invalid. Nick Gardner 16:26, 12 November 2007 (CST)

Okay, I see your point on equity being a subset of efficiency. My main reason for sticking it in there is that after looking at 2 or 3 introductory micro textbooks, that seemed to be the general theme. However, I think sticking to the two theorems is a good idea. It's too bad though... I do like that picture of the capitol, but a walrasian auctioneer would be much better. Stephen Saletta 10:04, 13 November 2007 (CST)