Applied economics is based almost entirely on the potential pareto principle. A prime example is cost-benefit analysis.
Peter [EMAIL PROTECTED] wrote: > Ken writes, > > >I'm not an economist but my understanding of traditional > >welfare economics is that there would be an increase in > >welfare as long as there is a potential pareto improvement. > > By definition a pareto improvement helps some and doesn't hurt anyone. Only > actual pareto improvements clearly "improve welfare." > > Potential pareto improvements are not welfare improving. Saying that the gains > exceed the loses and, so, that social welfare improves requires, first, > interpersonal utility comparisions and, second, that you make more-or-less > arbitary assumptions about how to weight individual utilities to aggregate up > to a social welfare function. > > Interpersonal utility comparisions have been rejected by mainstream welfare > economics for decades. Arbitary weightings of individuals' utilities functions > are, well, arbitary and unsupported by any aspect of mainstream welfare > economics. > > Others on the list are more knowledgeable about mainstream welfare economics > and I hope they correct me if I'm wrong. > > Eric
