ABSTRACT
This chapter deals with the discussion of “community indifference curves,” contemporary developments in indifference curve analysis that move away from preference theory, and I. M. D. Little’s Critique of Welfare Economics. The number of sets is infinite, and in any particular case the selection of one of them must be determined by its compatibility with the values prevailing in the community the welfare of which is being studied.” The welfare function of the individual utilities is then maximized with the utility possibility frontier as the constraint. Paul Samuelson rejects the compensation tests that play a key role in the New Welfare Economics, including Tibor de Scitovsky’s compound test, as “’twere better” statements. Among active researchers in behavioral welfare economics, the consensus seems to be that the revealed preference hypothesis is false in general. Little dissents from the scientism of both sides in the controversy between the New Welfare Economics and the saltwater school.
