Consumers' Progress: The History of Applied Welfare Economics (Scholar's Award)

Georgia State University Research Foundation, Inc., Atlanta GA

Investigators

Abstract

Throughout most of the twentieth century, American economists as a group have been deeply ambivalent about so-called "welfare economics." In contrast to the tasks of describing economic activity and predicting how the economy might respond to some stimulus, welfare economics requires more explicit value judgments about how individuals or groups are faring, about the extent to which they may be made better or worse off by government policies, and about how one group?s gains should be weighed against another group?s losses. Examples include measurement of GDP, measurement of the cost of living (inflation), and cost/benefit analysis. Over the course of the 20th century, economists generally became more accepting of such activities, with profound implications for the discipline and for the shaping of American public policy. This research explores the history of that transformation, focusing on the practice of journeymen economists in government agencies and other institutions, as well as the theoretical developments by economists at elite research universities. Although the theory and practice of welfare economics has been a common source from which economists have drawn their contributions to a variety of statistical measurements, work by historians on the connections between social science, policy, and the modern state have not made these connections. Work by academic economists, on the other hand, has tended to emphasize the theoretical contributions of influential figures at elite institutions, neglecting the work done "in the trenches" by more modest economists, in government agencies for example. This work combines these approaches by connecting the detailed decisions made by applied researchers to the broader currents in academic economics as well as the political climate in which the operated. Such a study will contribute to our understanding of the world in three important ways. First, it will help us to understand an important part of the modern history of economic and social policy in the United States. Second, it will help us to understand the sociology of the economics profession, exploring the ways economists have wrestled with and resolved the tensions pulling them toward and away from policy analysis. Third and finally, this history has the potential to inform prominent policy issues of today. For example, the lessons learned in the 20th century as bureaucrats, economists, and statisticians developed institutions to measure economic welfare may be directly applicable to similar struggles of those statistical agencies who today seek indicators of ecological health. Research from this project will be published as a monograph aimed at historians, economists, and policy makers.