10 - Utilitarianism without Utility

Summary

The social welfare function furnishes the primary tool of normative economics: It aggregates the utilities of different agents, by summing them for example. That technique is no longer available when preferences are incomplete since agents then cannot be modeled by utility functions. Agents can however have well-defined utility functions for groups of goods, though they will not know how to weigh the functions for different groups against one another. A policymaker can aggregate these utilities across agents and thus pin down a unique normatively optimal allocation for each group of goods. Government policies are usually debated in this fashion. Rather than solve a global welfare optimization problem, governments and advocates attack each domain of policymaking separately, whether it be education or health. The chapter’s approach illustrates Sen’s criticisms of welfarism.