Pareto, Pigou and third-party consumption: divergent approaches to welfare theory with implications for the study of public finance

Michael McLure

The European Journal of the History of Economic Thought, 2010, vol. 17, issue 4, 635-657

Abstract: This study utilises the distinction between ophelimity and utility to contrast Pareto's and Pigou's divergent approaches to economic and social welfare when individuals are conscious of consumption by third-parties. It is argued that diverse characterisations of science lie at the heart of the substantive differences in these approaches to welfare, with divergences in the treatment of third-party consumption being more significant than any variations in the ordinal or cardinal representation of welfare issues. Moreover, differences associated with the treatment of third-party consumption have implications for the choice between an economic and a sociological base for the study of public finance.

Keywords: Ophelimity; Pareto; Pigou; third-party consumption; welfare (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1080/09672567.2010.482996

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