Welfare definition of economics

 Welfare Definition Of Economics

 Defined by Neo-classical economist Alfred Marshall

 Name Of book ‘Principle Of Economics’

 Date Of Publication 1890 AD

 Major Contributions:

 Applying mathematical principles to economic issues,

and established economics as a scientific discipline.

 Propounded the ideas of supply and demand, Concept

of elasticity, marginal utility, costs of production etc.

According to Alfred Marshall “Economics is the study of

mankind in the ordinary business of life it inquires how a man

earns income and how he uses it. Thus economics on the one

side is the study of wealth and on the other the most important

part is study of mankind.”

Features Of Welfare Definition

This definition believes the economics should give the primary importance to the

mankind and secondary to the wealth. Wealth is the means that increases human welfare.

Economics studies about the ordinary human beings instead of economic man defined

by Adam Smith. Ordinary human beings are those who are not only for accumulating more

and more wealth but also try to experience love, sympathy, goodwill, respect etc. which

make human life more meaningful.

Economics does study about material welfare. The satisfaction obtained from the

consumption of material or physical goods is called material welfare. It does not care

about the non material satisfaction.

Alfred Marshall states that, economics is the social science as it studies only about those

people who live in the organized society. Those who are isolated from the society such as,

sage, monk, bagger etc. are not the matter of economics to study.

Economics is the normative science as it studies about value judgment. Marshall states

that, wealth should be utilized to obtain the human welfare. 

Criticisms of Welfare Definition

Main critic of the definition: Modern economist Lionel Robbins

Welfare definition only classifies, ordinary and non ordinary human beings , economic

and non economic activities etc. without paying much attention to explain such concepts.

Robbins opined that, this definition is classificatory rather than analytical one..

Robbins argues that the law of economics like law of diminishing marginal utility etc.

applies even to hermits, baggers, priests, yogis. Economics is applicable to all human

beings irrespective of their belongingness. So economics is the human science not the

social science.

In welfare definition, Marshall only talks about the material welfare without paying much attention to the fact that welfare is the subjective phenomenon. It can be varied for

different individuals, different places & different circumstances.

Robbins states that, it is very difficult to separate things to material and non material .

For example, services provided by educationalists, medical professionals, lawyers etc. are

not material but still they increase the human welfare.

Lionel Robbins emphasizes that, Economics is the positive science as it studies the economic activities without any vaue judgement.