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The Pareto Principle

The Pareto Principle Abstract The purpose of the paper is a discussion of the meaning and relevance of the Pareto principle in economics. To begin with, the principle is briefly retraced in Pareto’s own writings. Its contemporary meaning was, however, developed in the context of the “New Welfare Economics”. While Pareto technically employed the principle in order to describe an equilibrium situation, Kaldor and Hicks developed it somewhat differently as a yardstick for economic policy formulation. Sometimes, the principle is also discussed as a decision rule, and in this context some critics - though not the present author - believe it to have a conservative bias. Finally, recent discussions center around the incompatibility of the Pareto principle and “liberal” values. This conflict might be of limited relevance, only, due to a misconstrued formalism. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Analyse & Kritik de Gruyter

The Pareto Principle

Analyse & Kritik , Volume 2 (2) – Nov 1, 1980

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Publisher
de Gruyter
Copyright
Copyright © 1980 by the
ISSN
0171-5860
eISSN
2365-9858
DOI
10.1515/auk-1980-0203
Publisher site
See Article on Publisher Site

Abstract

Abstract The purpose of the paper is a discussion of the meaning and relevance of the Pareto principle in economics. To begin with, the principle is briefly retraced in Pareto’s own writings. Its contemporary meaning was, however, developed in the context of the “New Welfare Economics”. While Pareto technically employed the principle in order to describe an equilibrium situation, Kaldor and Hicks developed it somewhat differently as a yardstick for economic policy formulation. Sometimes, the principle is also discussed as a decision rule, and in this context some critics - though not the present author - believe it to have a conservative bias. Finally, recent discussions center around the incompatibility of the Pareto principle and “liberal” values. This conflict might be of limited relevance, only, due to a misconstrued formalism.

Journal

Analyse & Kritikde Gruyter

Published: Nov 1, 1980

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