Normative Criteria for Efficiency and Equality

A set of flashcards focusing on key vocabulary terms related to normative criteria for efficiency and equality in economics.

Normative question

A question that requires defining a standard or norm against which outcomes are evaluated.

Positive question

A question that asks 'what is?' and is rooted in empirical science.

Consequentialism

Judgments are based on actual, measurable consequences rather than intentions or rules.

Welfarism

Evaluating social outcomes based solely on the welfare of the individuals concerned.

Efficiency

Criterion that emphasizes no unnecessary waste in resource allocation.

Equality

Criterion that emphasizes fairness in the distribution of resources.

Pareto efficiency

An outcome where no further improvements can make one agent better off without making another worse off.

Pareto improvement

A change that makes at least one agent better off without making anyone worse off.

Envy-freeness

An allocation is envy-free if no agent prefers someone else’s allocation to their own.

Ordinal utility

Utility that reflects the order of preferences without implying the degree of difference between them.

Cardinal utility

Utility that includes meaningful numerical values allowing for interpersonal comparisons.

Utility Possibility Set

The set of all utility profiles that are feasible for a given allocation.

Utility Possibility Frontier

The boundary representing Pareto efficient outcomes in a utility possibility set.

Social welfare function

A method to aggregate individual utilities to rank social outcomes.

Utilitarianism

An ethical stance evaluating actions based on their contribution to overall utility.

Diminishing Marginal Utility

The principle that as an individual consumes more of a good, the additional satisfaction gained decreases.

Egalitarianism

A principle advocating for equal outcomes or distribution among individuals.

Gini Coefficient

A measure of statistical dispersion representing income inequality within a population.

Maximin welfare function

A criterion that emphasizes maximizing the utility of the least well-off member of society.

Social planner

A hypothetical decision-maker who aims to maximize social welfare.

Felicific calculus

An approach in utilitarianism used to evaluate the moral worth of actions based on their outcomes.