The study of how economic well-being on an aggregate level is affected by the allocation of resources and economic policies.
To measure welfare, economists usually assign units of utility in order to compare the subjective well-being of an individual in different situations. Based on those individual results, they can then derive conclusions for the aggregate economy.
One of the main topics of welfare economics is the redistribution of wealth. This is an extremely delicate issue, especially considering there may be several optimal states in an economy from a social welfare perspective. Therefore it is essential for policy makers to consider the implications of their decisions on social welfare.e
Labels: Dictionary, Welfare Economics