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Happiness and Pareto


  • George Irvin



While the utilitarian notion of ‘happiness’ is unsatisfactory, widespread interest in the subject suggests that economists are recognising the importance of relative income status, particularly in the US and the UK where income inequality has increased greatly . If relative income matters, one must reconsider the notion of a Pareto improvement, which is basic to public policy decisions. By the same token, distributional issues are central to any discussion about the costs and benefits of growth, an issue suggested not merely by the ‘happiness’ literature but by much recent writing on social capital, co-operative surviv al strategies the like. Nor is there a simple trade-off between efficiency and equity, since the two may be complementary. The neo-classical theory of factor rewards cannot justify current inequality since, upon closer examination, it is tautological and incoherent. The conclusion is that economists would do better to seek guidance on distributional matters from Rawlsian-type political theory.

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  • George Irvin, 2007. "Happiness and Pareto," ICER Working Papers 27-2007, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:27-2007

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    1. Alberto F. Alesina & Edward L. Glaeser & Bruce Sacerdote, 2006. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Chapters,in: NBER Macroeconomics Annual 2005, Volume 20, pages 1-100 National Bureau of Economic Research, Inc.
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