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Toward a “Prodigious Revival of French Economics”? Allais, Debreu, and the Dead Loss Controversy (1943–51)

Author

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  • Raphaël Fèvre

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur)

  • Thomas Michael Mueller

    (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis)

Abstract

This article aims to trace the hitherto little-known controversy involving Maurice Allais, François Divisia, Harold Hotelling, and Gérard Debreu in the immediate postwar years. The controversy turned on "dead loss," a measure of the maximum value of available surplus serving as a gauge of economic efficiency and social welfare. The protagonists argued about how it should be expressed mathematically, the hypothesis underpinning it, and its general significance. The paper draws heavily on unpublished materials (letters and notes) to unfold the different stages of the dead loss controversy and shows that it was driven by an intricate interlacing of technical advances in welfare economics with Allais's personal ambition to spearhead the revival of French economics. Eventually, this controversy (and the tense exchange between Allais and Debreu that came with it) proved a remarkable—although tacit—driving force behind Debreu's contributions of the early 1950s.

Suggested Citation

  • Raphaël Fèvre & Thomas Michael Mueller, 2023. "Toward a “Prodigious Revival of French Economics”? Allais, Debreu, and the Dead Loss Controversy (1943–51)," Post-Print hal-04119618, HAL.
    • Handle: RePEc:hal:journl:hal-04119618
    DOI: 10.1215/00182702-10213611
    Note: View the original document on HAL open archive server: https://hal.science/hal-04119618
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    References listed on IDEAS

    as
    1. Nancy Ruggles, 1949. "Recent Developments in the Theory of Marginal Cost Pricing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 17(2), pages 107-126.
    2. Bertrand R. Munier, 1991. "Nobel Laureate: The Many Other Allais Paradoxes," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 179-199, Spring.
    3. Bjerkholt, Olav, 2017. "On The Founding Of The Econometric Society," Journal of the History of Economic Thought, Cambridge University Press, vol. 39(2), pages 175-198, June.
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    5. Bert M. Balk, 2005. "Divisia price and quantity indices: 80 years after," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 59(2), pages 119-158, May.
    6. Jesus Pastor & C. Lovell & Juan Aparicio, 2012. "Families of linear efficiency programs based on Debreu’s loss function," Journal of Productivity Analysis, Springer, vol. 38(2), pages 109-120, October.
    7. Richard Arena, 2000. "Les économistes français en 1950," Revue Économique, Programme National Persée, vol. 51(5), pages 969-1007.
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    More about this item

    Keywords

    Maurice Allais; Gérard Debreu; Deadweight loss; Theoretical practice; Welfare economics;
    All these keywords.

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