TOPIC INFO (UGC NET)
TOPIC INFO – UGC NET (Economics)
SUB-TOPIC INFO – Micro Economics (UNIT 1)
CONTENT TYPE – Detailed Notes
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1. Welfare Economics
2. Fundamental Theorems of Welfare Economics
2.1. Introduction
2.2. Pareto Efficiency (or Pareto Optimality)
2.3. Social Welfare Function (SWF)
2.4. Consumer Surplus & Producer Surplus
2.5. Equity vs Efficiency in Welfare Economics
2.6. Limitations of Welfare Economics Theories
2.7. Role of Government in Welfare Economics
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Welfare Economics: Fundamental Theorems, Social Welfare Function
UGC NET ECONOMICS
Micro Economics (UNIT 1)
Welfare Economics
Welfare economics, in simple terms, is the study of how the allocation of scarce resources affects the well-being or welfare of individuals and society as a whole. Welfare economics typically involves the derivation or assumption of a social welfare function, which can then be used to rank economically feasible allocations of resources based on the social welfare they generate.
Welfare economics works by evaluating economic states and policy decisions using concepts like Pareto efficiency, social welfare functions, and cost-benefit analysis to determine what maximizes societal welfare.
Welfare economics is a significant part of microeconomic theory that focuses on evaluating how resources are distributed across society and how that distribution affects individual and social well-being.
Welfare economics is a branch of economics that studies how the allocation of resources and goods impacts the overall economic welfare or well-being of society at large. Efficiency (optimal use of resources) and equity (fairness in distribution) are both evaluated by this sub-discipline of economics. Hence, it is an important part of public policy and the development planning process.
This branch serves as the theoretical basis for policies that aim to maximize the satisfaction of society by using measures such as Pareto efficiency, cost-benefit analysis, and social welfare functions.
Arthur Cecil Pigou has been recognized as the father of welfare economics for his publication of The Economics of Welfare. Besides, he has been a disciple of Alfred Marshall, who defined economics as the study of mankind in the ordinary business of life. An important one among his considerations is economic welfare and its public policy relevance.
Other major contributors are as follows:
Vilfredo Pareto – Developed Pareto Optimality.
A.C. Pigou – Developed Pigouvian taxes.
Amartya Sen – Introduced capabilities and freedom in welfare economics.