Economic welfare

The welfare definition of economics is an attempt by Alfred Marshall, a pioneer neoclassical economist, to redefine his field of study. This definition expands the field of economic science to a larger study of humanity. Specifically, Marshall's view is that economics studies all the actions that people take in order to achieve economic welfare. In the words of Marshall, "man earns money to get material welfare." This is why economists since Marshall have described his definition as the welfare definition of economics. This definition enlarged the scope of economic science by emphasizing the study of wealth and humanity together, rather than wealth alone.

In his widely read textbook, Principles of Economics, published in 1890, Marshall defines economics as follows:

"Political Economy or Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of material requisites of well-being".

The following are the implications of this definition:

According to Edwin Cannan, "the aim of political economy or Economics is the explanation of the general causes on which the material welfare of human beings depend".

Marshall clearly explains that economic activity is different from other activity. For example,

Marshall defines economic activity as separate from the above activities. A farmer who toils in the field, or a worker on an assembly, are performing an economic activity: they work to increase their material welfare (primarily by earning money). Money buys goods or services that satisfy wants. In other words, economics deals with effort, wants, and the satisfaction of those wants.

Followers in the neoclassical tradition, such as William Beveridge and Arthur Pigou have continued to define economics in terms of material economic welfare. According to Pigou, "the range of enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rod of money".

Marshall’s definition has been criticized by more recent economists, including Lionel Robbins. Robbins' criticisms include:

...
Wikipedia