Chapter 5 - VALUES AND CHOICE

Abstract

This chapter discusses the welfare economics and value judgments. Welfare economics is concerned with policy recommendations. It explores the ways of arriving at such conclusions as given the choice between social states x and y, x should be chosen. It is obvious that welfare economics cannot be value-free, for the recommendations it aims to arrive at are themselves value judgments. In view of this it must be regarded as somewhat of a mystery that so many notable economists have been involved in debating the prospects of finding value-free welfare economics. The New Welfare Economics was much concerned with deriving policy judgments from purely factual premises. The Pareto principle has been often taken to be free from value judgments. On the negative side, Robbins celebrated attack on the use of value judgments in economics concentrated exclusively on the difficulties of interpersonal comparison. The Hicksian comment on the objectivity of the compensation test is also based on the idea that if compensations are paid, everyone is better off, and there is no interpersonal conflict.