ABSTRACT
Welfare economics is a systematic study of normative policy recommendations in economics. Applied welfare economics is an attempt to say “what ought to be” with respect to government policy, and theoretical welfare economics is the attempt to learn how to create a reliable applied welfare economics. A. C. Pigou’s welfare economics was highly coherent in that sense. A large part of the story to follow is of the attempt to retain that coherence without the specific utilitarian basis that Pigou gives it, and the failure of that attempt. Pigou’s welfare economics was firmly based in utilitarian ethical theory as Pigou understood it. This theory provided the most transparent support for the argument that free markets could result in increased prosperity in a morally significant sense. The chapter also presents an overview of the key concepts discussed in this book.
