Assumptions and Limitations of Welfare Concept

We give below a few assumptions on which the  welfare concept rests  Memorability of Utility. The   Carly welfare  economists assumed that utility was a quantifiable quantity and people’s satisfaction could be   measured. Man’s economic welfare is said to be a sum of total  of his satisfactions. Also welfare of   individualist could be added to arrive at total social welfare. But there is  no objective measurement of a   person’s satisfaction  since it is just a state of mind. Hence according to  some critics welfare economics is  hypothetical and  lacks scientific character.   Inter personal Comparisons. We have said

that social welfare can be increased by  making some one more satisfied without  making anyone less satisfied. But  we can assess the increase in welfare  only if we compare satisfaction of one with that of   other. Pious implicitly  assumed inter personal comparison but trenchant criticism by Professor Robbins made the economists aseptically.  Later writers as we have seen have attempted to formulate   welfare theory  independently of inter personal comparison  of satisfaction. This had led some economists   o hold that inter-personal comparisons of satisfaction or  happiness are illegitimate or unscientific. cannot believe says Robbins that it is helpful to speak as  if inter-personal comparison of utility rest on   scientific foundations Thus assumption of inter personal comparability  of satisfactions imposes a  serious limitation  on welfare analysis

Concept of Maximum. Welfare analysis ‘assumes that there is a determinate maximum. But actually there may be·several optima or points of maximum  satisfaction. Economic theory has concerned itself with the movement from a lower to a higher optimum.  Economic welfare concerns itself  with a single optimum

Consumer’s Preferences. It is assumed that  consumer’s preferences are independent of prices  or other  hanged. This assumption is not realistic.  The consumer’s preferences are bound to be affected  by   hanged in prices or say changes in fashion. But  the welfare economist says that if new indifference  curves have to be drawn consequent on a change in price the diagrams of indifference maps melt into  chaos.

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