welfare

To put it simply, EE requires that a theory of welfare should accommodate with the simple behavioral fact that richer people are not necessarily more happy. The modern economic concept of welfare is based on the concepts of subjective >value and >equilibrium which have been dominating economic science since the late 19th century. Since EE rejects this framework, it also needs to develop an independent concept of welfare.

Whereas the standard concept is consequentialist and utilitarian, EE proposes a compound concept that is rule-based and consequentialist in its different aspects, with the latter including time considerations and uncertainty in the sense that welfare always includes expectations and awareness of future opportunities and potential. Both finally relate to the >capacity of actors, such that an increase of capacity is tantamount to an increase of welfare, if this increase is actually reflected in individual >cognition. The cognitive and emotional reflection of this is "happiness" as a state of the actor that is amenable to empirical measurement, in principle. However, especially rule-based welfare criteria cannot be measured in uni-dimensional terms, so that the EE concept of welfare cannot be reduced to the standard concept of utility.

    * Rule-based welfare criteria refer to the individual valuations of the >institutions of a economy, which follow more fundamental norms of justice, individual liberty or autonomy. Since these are partly >culture-specific, the welfare concepts need to be part of a theory of cultural evolution and value change. However, there are meaningful approaches to assessing changes of the capacity of actors under different institutional regimes.
    * Consequentialist criteria refer to the effects of the economic process for >states of actors in terms of their >needs. Although on first sight these are closely related to the availability of goods, there are three important EE modifications. The first goes back to the structure of >competition which always includes competition for status or, more general, >frequency dependent selection. Therefore, absolute increases of the availability of goods for individual actors may nevertheless be accompanied by relative declines of status and, hence, welfare losses. Second, any change of the endowment with goods may be accompanied by changes of expectations about future states. These future states may constitute changing frames of reference, so that valuation of current states is not determined unequivocally. Third, if needs can stay in conflict, sich that >decisions have to be taken, there is no unilinear and proportional relation between total happiness and betterment in single needs, as is assumed in the traditional approach of quantifiable trade-offs.


Another important problem is how to assess distributional issues in evolutionary welfare analysis. Here, EE emphasises the role of competition for status and hence, the impact of relative deprivation in the social perception of inequality. Status, however, is always linked to reference groups, which implies that a meaningful concept of welfare always needs to take >group selection into consideration. Ultimately, the EE concept of welfare has to be related to biological categories, which includes the role of reproductive success, as mediated via its complex determinants of social behavior of humans.

In sum, the EE concept of welfare is a much more complex category than the Paretian framework suggests. There is also no simple way to solve the problem with reference to universal consensus, because this consensus would be dependent on given institutions, structures of communication and distribution of individual capacities. Thus, EE welfare analysis is always linked with critical dialogue about conditions in society.

Basic References

The EE approach to welfare owes much to Amartya Sen’s classic concept of "capabilities", as developed in:
Amartya Sen, The Standard of Living, Cambridge et al.: Cambridge University Press.
A valuable recent survey of welfare theory and its possible revision from the viewpoints of biological anthropology and evolutionary theory is:
Christian Sartorius, An Evolutionary Approach to Social Welfare, London & New York: Routledge

Research on happiness is mostly done outside of economics, for some resources visit the website
The World Data Base on Happiness

value   need
welfare   competition