• Is welfare economics silly?

    Yesterday, on Twitter, I intepreted Paul Kelleher as asserting that welfare economics is “silly.” Today, in a post, he clarifies his views. If you love, hate, use, or are interested in welfare economics, it’s worth reading Paul’s post. It ends,

    [S]ometimes welfare economists make seriously problematic logical leaps that lead them to unjustified policy frameworks and prescriptions.

    True enough, though I’m not sure “welfare economist” is a profession. However, replace it with “philosopher” or “plumber” and Paul’s sentence is no less true.

    After you read Paul’s post, read Julian Jamison’s rebuttal, in which he writes that Paul is

    slightly confused or slightly misleading in [his] conclusion that welfare economics is taken too far normatively speaking.

    Snap!

    With that, I’m going to get out of Paul’s and Julian’s way. The former is more skeptical of the value of welfare economics than am I. The latter is far better able to defend it than could I, though at the top of his post Julian cites several posts of mine in which I do so. I will only add this, which I’ve emailed to both of them:

    Welfare economics is of use in rigorously exploring policy options, given certain assumptions. The neoclassical branch can define potential policies that are Pareto improving (or not). That is, at most, the beginning of policy analysis, not the end. One then needs to examine the implications of those policies across distributions of relevance (income, age, race, education, occupation, and so forth). Doing so is a more complete policy analysis, informed by economics but not exclusively of it.

    Leaving out the welfare economics because it might be applied by some in a “silly” way goes too far. The tool, particularly in applied form is too helpful in inserting rigor and clarity. Economists have a point when they claim that other disciplines, though providing value, leave out important factors and trade-offs that economics analyses bring to light.

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