The ‘Pareto Principle’ has traditionally aided economists in evaluating economic institutions and outcomes. However, the principle has proven to be insufficient, particularly in situations where there is little unanimity in deciding when choice A or choice B is better. Consequently, economists have now begun to espouse different theories that give them an improved basis for evaluating economic outcomes and institutions: Arrow’s theorem, moral philosophy, and non-welfarist social choice theory. Other topics discussed in this chapter include the function of social welfare and the paradox of the Paretian liberal.
