Toward a “Prodigious Revival of French Economics”? Allais, Debreu, and the Dead Loss Controversy (1943–51)

Raphaël Fèvre () and Thomas Mueller
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Raphaël Fèvre: GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur

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Abstract: This article aims to trace the hitherto little-known controversy involving Maurice Allais, François Divisia, Harold Hotelling, and Gérard Debreu in the immediate postwar years. The controversy turned on "dead loss," a measure of the maximum value of available surplus serving as a gauge of economic efficiency and social welfare. The protagonists argued about how it should be expressed mathematically, the hypothesis underpinning it, and its general significance. The paper draws heavily on unpublished materials (letters and notes) to unfold the different stages of the dead loss controversy and shows that it was driven by an intricate interlacing of technical advances in welfare economics with Allais's personal ambition to spearhead the revival of French economics. Eventually, this controversy (and the tense exchange between Allais and Debreu that came with it) proved a remarkable—although tacit—driving force behind Debreu's contributions of the early 1950s.

Keywords: Maurice Allais; Gérard Debreu; Deadweight loss; Theoretical practice; Welfare economics (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-his and nep-hpe
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Published in History of Political Economy, 2023, 55 (1), pp.1-38. ⟨10.1215/00182702-10213611⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04119618

DOI: 10.1215/00182702-10213611

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