Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle: A Counter Example

Abstract

I make a key point that social welfare functions that only rely on individual utility still may reflect what people typically think of as a non-welfarist approach by critiquing Kaplow and Shavell (Journal of Political Economy, 2001) who propose and “prove” a proposition asserting that “Any non-welfarist method of policy assessment violates the Pareto principle.” The fundamental mistake made by Kaplow and Shavell is that their definition of welfarism equates welfarist methods and social welfare functions that only rely on individual utility. As a result, their definition of (non-)welfarism does not always coincide with common interpretations of (non-)welfarist methods.