Essays on Welfare Economics - Social Welfare Functions Essay

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The paper "Welfare Economics - Social Welfare Functions" is a great example of a micro and macroeconomic essay.   Construction of social welfare functions and measurement of relative efficiency have been formulated as analytical techniques to clarify normative changes in equity and efficiency (Johansson, 1991, p. 78). Friedman (2002, p. 62) concurs that Pareto optimal utilities have been criticized owing to varying value judgments and hence, making it difficult to be adopted in policy issues analysis. Economic analysts become sensitive equity and efficiency when approaching the impact of political feasibility and social goals (Roemer, 1998).

The issues arising are fairness and balanced allocations that will maximize the well-being of individuals and whether the social welfare functions are equitable or efficient  with regard to the  proposed or existing policies (Salvatore, 1989, p. 33. The aim of the essay  is  to examine social welfare functions as embodying the normative conception of efficiency and equity, as well as its criticism as an effective tool in welfare economic analysis. Social welfare functions: Integrating equity and efficiency Inefficient resource allocation and the attempt by all individuals in an economy to maximize their utility have rendered the worst-off members of society under social welfare (Manna, 1997).

Chadwick and Schroeder (2002, p. 47) argue that social welfare functions seek to maximize efficiency and equality during the transfer of resources to the poor members of society, finance public expenditures and income maintenance. Friedman (2002, p. 67) agrees that efficiency is resource allocation that balances the better off and the worse off person while equity is the distribution of well-being to the people within an economy relatively. Individuals judge their own well-being, and policy analysis affects utility level, and overall satisfaction (Manna, 1997, p.

458). At some level, normative consequences of transferring resources to individuals in an economy involve equity judgments and policy issues. The potential importance of equity is its impact on political feasibility and social goals (Ghatak, 2003, p. 457).

References

Arrow, K. J. (1963). Social Choice and Individual Values, 2nd Edition. New York: John Wiley and Sons.

Arrow, K.J., Sen, A. & Suzumura, K. (2005). Handbook of Social Choice and Welfare. Gulf Professional Publishing.

Chadwick, R.F. & Schroeder, D. (2002). Applied Ethics: Critical Concepts in Philosophy, Volume 5. Taylor & Francis. Journal of Applied Ethics. Vol 5 (4): 43-49.

Fleurbaey, M. & Maniquet, F. (2011). A Theory of Fairness and Social Welfare. Cambridge University Press. Econometric Society Monographs. Vol. 48 (2): 16-23.

Friedman, L.S. (2002). The Microeconomics of Public Policy Analysis. Princeton University Press.

Ghatak, S. (2003). Introduction to Development Economics. Psychology Press.

Johansson, P.O. (1991). An Introduction to Modern Welfare Economics. Cambridge University Press.

Manna, M.L. (1997). Readings in Microeconomic Theory. Cengage Learning EMEA.

Myrdal, G. (1998). The Political Element in the Development of Economic Theory. Psychology Press. Journal of Economics and Society. Vol. 7(2): 34-48.

Roemer, J.E. (1998). Theories of Distributive Justice. Harvard University Press.

Salvatore, D. (1989). African Development Prospects: A Policy Modeling Approach. Taylor & Francis.

Sen, A. K. (1997). Choice, Welfare and Measurement. Harvard University Press.

Sinha, U.P. (2007). Economics of Social Sector and Environment. Concept Publishing Company.

Tewari, D.D. (2003). Principles of Microeconomics. New Age International.

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