Introduction to social choice and welfare

Social choice theory is concerned with the evaluation of alternative methods of collective decision-making, as well as with the logical foundations of welfare economics. In turn, welfare economics is concerned with the critical scrutiny of the performance of actual and/or imaginary economic systems, as well as with the critique, design and implementation of alternative economic policies. The Handbook of Social Choice and Welfare, which is edited by Kenneth Arrow, Amartya Sen and Kotaro Suzumura, presents, in two volumes, essays on past and on-going work in social choice theory and welfare economics. This paper is written as an extensive introduction to the Handbook with the purpose of placing the broad issues examined in the two volumes in better perspective, discussing the historical background of social choice theory, the vistas opened by Arrow's Social Choice and Individual Values, the famous "socialist planning" controversy, and the theoretical and practical significance of social choice theory.social choice theory, welfare economics, socialist planning controversy, social welfare function, Arrovian impossibility theorems, voting schemes, implementation theory, equity and justice, welfare and rights, functioning and capability, procedural fairness

The Paradoxes of the Liberal Ethics of Non-interference

We analyse the liberal ethics of non-interference applied to social choice. Two liberal principles capturing non-interfering views of society, inspired by J.S. Mill's conception of liberty are examined, which capture the idea that society should not penalise agents after changes in their situation that do not affect others. Two paradoxes of liberal approaches are highlighted. First, it is shown that a restricted view of non-interference, as reflected in the Individual Damage Principle, together with some standard axioms in social choice leads straight to welfare egalitarianism. Second, it is proved that every weakly paretian social welfare ordering that satisfies a general principle of noninterference must be dictatorial. Both paradoxes raise important issues for liberal approaches in social choice and political philosophy.Liberalism, Noninterference, Equality, Impossibility

Review of Howard DeLong (1991), "A refutation of Arrow’s theorem", with a reaction, also on its relevance in 2008 for the European Union

There will be many researchers who discover voting theory afresh and who will want to understand it and its interesting paradoxes. Arrow's theorem (1951, 1963) is the most celebrated result in social choice theory. It has been criticized a lot but Howard DeLong (1991), "A refutation of Arrow’s theorem", is a monograph that actually succeeds. The booklet has received insufficient attention in the literature. This review also compares DeLong’s approach with my own book "Voting theory for democracy" (2007) and comments on the relevance in 2008 for the European Union, with respect to the veto power of its Member States and their citizens.voting theory; voting systems; elections; public choice; political economy; Borda Fixed Point; democracy; European Union; Arrow's theorem;

Demystifying the 'Metric Approach to Social Compromise with the Unanimity Criterion'

In a recent book and earlier studies, Donald Saari well clarifies the source of three classical impossibility theorems in social choice and proposes possible escape out of these negative results. The objective of this note is to illustrate the relevance of these explanations in justifying the metric approach to the social compromise with the unanimity criterion.social choice, impossibility theorems, metric approach to compromise with the unanimity criterion

On Non-welfarist Social Ordering Functions

In this paper, criticizing the welfarist's framework in traditional welfare economics which provides a rather limited perspective for social evaluation, we propose a more comprehensive framework in which extended social ordering functions (ESOFs) are introduced. In this framework, not only welfaristic values, but also non-welfaristic values can be treated appropriately. Then, we examine the possibility of non-welfarist ESOFs which meet a value of Individual Autonomy, a criterion of non-welfairst distributive justice, and the welfarist Pareto principle. First, there is no first best ESOF in the sense that the above three axioms are satisfied simultaneously. Second, however, we can show the existence of some second best ESOFs, using a weaker lexicographic application method.

Physical approach to possession and use

In this study, the starting point is the well-known physical laws applied to human social life. On the basis of natural laws human actions are considered and through the prism of physical laws such concepts as use and possession are defined. A parallel is drawn between such a representation of these concepts and those conflicting views that are available in the literature regarding the concept of property. To complete the definitions of use and possession nature is introduced as a fictitious owner. And on this basis, the positive possibility of a theoretical solution to the problem of initial assignment is shown. Again, on the basis of physical laws, the fundamental concept of [human] needs is introduced. It is shown that the collision of people's needs on the same thing allows uniform classifying property defined in literature as the relationship between a person and a thing or as the relationship between people because of a thing. Considering the relationship between two human beings through needs and costs, as a natural necessity, people inevitably renounce their claims to possess and use certain things in favor of other people. It is shown that this refusal forms the right of those people in whose favor this refusal is carried out to possess and use things. The right of one is the refusal of all others to own and use the thing. It is shown that the right was ensured and will always be ensured by force. The use or threat of the use of force is something that can reliably ward off a person from the unbridled realization of his needs. In the process of the formation of mankind, nature itself forces people to organize into communities that can oppose their individual members and their associations with significantly greater power. The whole, as a rule, is stronger than its part. And it is society that can reliably ensure the exercise of rights for its members. Natural laws also make it possible to resolve, on the basis of the concept of law, as a renunciation of possession and use, the issue of belonging to what nature gives us. These are natural resources and the human body. It is shown that the human body should belong to the person himself, and the resources to all members of society equally. The affiliation of all other things produced by man can be unambiguously determined within the framework of contractual relations between members of society, their associations and society as a whole. Since the right of everyone is ensured by the society, and, therefore, by each member of the society individually, a necessary condition for membership is understanding and recognition of the rights of certain things to other members of the society. And this may be the main criterion for joining full members of society, as opposed to the commonly used age criterion, which works on the bulk of people, but gives failures in many special cases. A typical example of such cases is the deprivation or infringement of the rights of persons of full legal age, but committed acts that are called unlawful in society. As part of the research on ownership issues, ownership is considered. It is shown that the necessary tool for using the objects of co-ownership is the voting of co-owners. A special case of co-ownership, when all co-owners have equal shares in co-ownership, is indistinguishable from what is called democracy. It is shown that voting in general and democracy in particular, as procedures for aggregating preferences, can have a positive decision, in refutation of the universality of the conclusion of Arrow's theorem

Why Arrow's Theorem Matters for Political Theory Even If Preference Cycles Never Occur

Riker (1982) famously argued that Arrow’s impossibility theorem undermined the logical foundations of “populism”, the view that in a democracy, laws and policies ought to express “the will of the people”. In response, his critics have questioned the use of Arrow’s theorem on the grounds that not all configurations of preferences are likely to occur in practice; the critics allege, in particular, that majority preference cycles, whose possibility the theorem exploits, rarely happen. In this essay, I argue that the critics’ rejoinder to Riker misses the mark even if its factual claim about preferences is correct: Arrow’s theorem and related results threaten the populist’s principle of democratic legitimacy even if majority preference cycles never occur. In this particular context, the assumption of an unrestricted domain is justified irrespective of the preferences citizens are likely to have

A concept of progress for normative economics

On se demande en quel sens il serait permis de décrire comme progressives les transformations qu'a connues l'économie normative du 20ème siècle. On propose alors un critère simple de progrès qui convienne aux séquences de théories normatives, et on le fait jouer sur la transition historique de la nouvelle économie du bien-être à la théorie du choix social. Après avoir rétabli les articulations conceptuelles des deux théories, l'article conclut que celle-ci a représenté un progrès par rapport à celle-là. Il commente aussi, mais plus brièvement, les développements récents de l'économie normative et leur relation avec les deux étapes précédentes.Economie du bien-être;Théorie du choix social;Progrès;Economie normative;Fonction de bien-être social;Théorème d'Arrow;Welfarisme

Allocative and Informational Externalities in Auctions and Related Mechanisms

We study the effects of allocative and informational externalities in (multi-object) auctions and related mechanisms. Such externalities naturally arise in models that embed auctions in larger economic contexts. In particular, they appear when there is downstream interaction among bidders after the auction has closed. The endogeneity of valuations is the main driving force behind many new, specific phenomena with allocative externalities: even in complete information settings, traditional auction formats need not be efficient, and they may give rise to multiple equilibria and strategic non-participation. But, in the absence of informational externalities, welfare maximization can be achieved by Vickrey-Clarke- Groves mechanisms. Welfare-maximizing Bayes-Nash implementation is, however, impossible in multi-object settings with informational externalities, unless the allocation problem is separable across objects (e.g. there are no allocative externalities nor complementarities) or signals are one-dimensional. Moreover, implementation of any choice function via ex-post equilibrium is generically impossible with informational externalities and multidimensional types. A theory of information constraints with multidimensional signals is rather complex, but indispensable for our study