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social welfare function


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1 The level of welfare in an economy or society expressed as a function of economic variables. This is the Bergson–Samuelson sense. Social welfare can be expressed as a function W(X1,…,Xn) of the aggregate consumption levels Xi of goods i = 1,…,n. Alternatively, an individualistic social welfare function is a function of individual utility levels. If there are H consumers in the economy, then an individualistic social welfare function is written W(U1,…,UH), where Uh is the utility of h. Two special cases are the Rawlsian social welfare function

W = min{Uh}

and the utilitarian social welfare function

W = ΣUh.

These functions capture different philosophies concerning the desirability of equity in distribution.

2 A process for aggregating individual preferences into social preferences. This is the Arrow sense. Arrow's impossibility theorem addresses the difficulties of finding an acceptable aggregation process that works in all circumstances.

Subjects: Economics.


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