The usefulness of the main schools of welfare economics (old and new) in measuring inequality is analysed. It is noted that the literature on Pareto optimality avoids distributional judgements altogether, and that the standard social welfare functions approach also fails to provide a framework for distributional discussions because of its concentration on individual orderings only. Utilitarianism (the dominant faith of ‘old’ welfare economics), is too concerned with the welfare sum to be concerned with the problem of distribution and can produce strongly anti‐egalitarian results. Hence, the use of welfare economics for measuring inequality is rejected.
Keywords: economic inequality; inequality; measurement; Pareto optimality; social welfare functions; welfare economics
Chapter. 8328 words. Illustrated.
Subjects: Public Economics
Full text: subscription required