What is Welfare economics

 WELFARE ECONOMIC

'Welfare' is a state of the mind which reflect human happiness and satisfaction. it actually, welfare is a happy state of humen mind, Pigou regards individual welfare as the sum total of the satisfactions experienced by an individual and social welfare as the sum of total of individual welfare.

He divides welfare into economics welfare and non economic welfare. economic welfare is the part of social welfare which can directly or indirectly be measured in the money.  Pigou attaches great importance to economic welfare because welfare is a very wide term.

In his words : The range of our enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money. on the country, Non economic welfare is  that part of social welfare which cannot be measured in money, for instance moral welfare.

But is not proper to differentiate between economic and non-economic welfare on the basis of money. Pigou also accept it. According to him, Non economic welfare can be improved upon two ways, First, by the income earning method longer hour of working and unfavorable condition will affect economic welfare adversity.

Second, by the income spending method. It is assumed in economic welfare that expenditures incurred on different consumption goods provide the same amount of satisfaction. But in actuality  it is not so because when the utility of purchased good starts dimensioning the non-economic welfare declines which result in reducing the total welfare.

But it is not possible always, because the causes that lead to an increase in economic welfare may also reduce non-economic welfare. The increase in total welfare may, there for be less than anticipated. For instance, with the increase in income both the economic welfare and total welfare increase and vice versa.

But economic welfare depend not only on the amount of income but also on the method of earning and spending it when the worker earn more by working in factories but decide in slums and vitiated atmosphere, the total welfare cannot be said to have increased even throw the economic welfare might have increased, Hence economic welfare is not an indicator of total welfare because the economic welfare is not always related to our  social status of Human.

welfare economics is a branch of economics that use microeconomics technique evaluate well being at the aggregate

Attempting to apply the principal of welfare economics give rise to the field of public economic the study of how government might intervenes to improve social welfare.

Welfare economics always provide the theoretical foundation for particular instrument of public economics including post benefit analysis while the combination of welfare economic and inside for behaviour economic has led to the creation of a new subfield behaviour economic.

The field of welfare economic is associated with the fundamental theorem, the first state that given certain assumptions competitive market produce efficient outcome it capture the logical of Adam Smith invisible hand.

The second state that given fruther restriction any Pareto efficient outcome can be supported as a competitive market equilibrium, thugs of social planner could use our social welfare function to pick the most equitable efficient outcome then use lump some transfer followed by competitive trade to bring it about because of welfare economic close price to social choice theory Arrow impossibility theorem is some time listed as third fundamental theorem.