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

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  • Michael McLure

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.

Suggested Citation

  • Michael McLure, 2010. "Pareto, Pigou and third-party consumption: divergent approaches to welfare theory with implications for the study of public finance," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(4), pages 635-657.
    • Handle: RePEc:taf:eujhet:v:17:y:2010:i:4:p:635-657
    DOI: 10.1080/09672567.2010.482996
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    References listed on IDEAS

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    1. Luigino Bruni, 2002. "Vilfredo Pareto and the Birth of Modern Microeconomics," Books, Edward Elgar Publishing, number 2238, March.
    2. Peter Groenewegen, 1995. "A SOARING EAGLE: Alfred Marshall 1842–1924," Books, Edward Elgar Publishing, number 193, March.
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    Cited by:

    1. Stavros Drakopoulos & Ioannis Katselidis, 2015. "From Edgeworth to econophysics: a methodological perspective," Journal of Economic Methodology, Taylor & Francis Journals, vol. 22(1), pages 77-95, March.
    2. Drakopoulos, Stavros A., 2014. "Mathematical Psychics and Hydraulics: The Methodological Influence of Edgeworth and Fisher," MPRA Paper 52981, University Library of Munich, Germany.
    3. Karen Knight & Michael McLure, 2012. "The Elusive Arthur Pigou," Economics Discussion / Working Papers 12-05, The University of Western Australia, Department of Economics.
    4. Drakopoulos, Stavros A. & Katselidis, Ioannis, 2017. "The Relationship between Psychology and Economics: Insights from the History of Economic Thought," MPRA Paper 77485, University Library of Munich, Germany.

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