Pt1/4 Prof Jeff Richardson seminar 27.10.10

"How to translate individual preference into social preference"
The term "social welfare" denotes concerns for the community which transcend the individual's self interested preferences.
However there is no coherent concept corresponding with the words. Economists attempt to overcome the problem, in
theory, using the Samuelson-Bergson Social Welfare Function and, following the Kaldor-Hicks tradition, through the notion
of a potential Pareto improvement. Neither approach succeeds.

It is argued that progress in social decision making will be best achieved by abandoning the quasi rationalism of the
conventional theoretical approaches (including appeal to Arrow‟s Impossibility Theorem) and by adopting a paradigm more firmly founded upon empirical reality. In particular social decision making, with respect to National Health Schemes, should be built upon a foundation of Empirical ethics, i.e. information relating to the ethical preferences of the population. The challenge is to develop governance structures for responsible assessment of the information provided by social scientists including the results from empirical ethics; and institutions which may best judge the appropriate course of action with respect to the allocation of health resources.

The result is likely to be a role for economic evaluation which differs from the present model. In particular it is likely to commence with issues of fairness and sharing, and assign a smaller role to the notion of "disembodied" efficiency as incorporated in algorithms such as the minimisation of cost per QALY.

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