What is welfare?

The meaning of welfare is a bit like the meaning of life: most people are delightfully vague about it; some logical purists will question whether there is any meaning to be given to it; the zealot can interpret it in as narrow a fashion as he wishes. The welfare of an individual obviously depends on a variety of features of the social and economic environment in which he finds himself and a variety of individual characteristics and circumstances. Each of us will probably give different degrees of emphasis to these various features depending upon our backgrounds and prejudices. Each of us will probably have a pet idea on how to incorporate these features into a specific theoretical or empirical model of individual welfare.

Even if we were to narrow the issue to one of economic welfare, or of utility – as it is conventionally interpreted by economists – problems would still remain. A person's utility is usually regarded as being determined by his own income or resources and his tastes, but in principle there is an enormous range of other possible factors that could be taken as determinants of a person's welfare; for example, it might be affected by other people's income or utility. Apart from these factors there is a complex of market forces, institutional provisions and individual constraints which will influence his economic opportunities.