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The modern economic theory of welfare, which relates to normative political economy, studies the dependence of the results of the state economic policy on its objectives. This branch of knowledge attracts special attention of the leading economists in view of the need to include the ethical criteria in the state economic policy. The economic goods distribution plays a key role in shaping public welfare. The public welfare function is the analytical expression which is based on the set of ethical criteria of the economic goods distribution. The theoretical basis for determining the public welfare function is laid in the economic theory of welfare. The purpose of the research is to generalize the scientific views on public welfare and approaches to its definition. The individual welfare is an integral estimation of all aspects of human life, which characterizes how «good» it has lived a certain period of its life. There are two principle approaches to determining the level of the individual welfare as an integral indicator of «satisfaction» of a person: an institutional and individualistic one. A significant drawback of the institutional approach is the subjective determination of a set of ethical criteria, which determine the level of the individual welfare and, accordingly, ways to improve it. The dominance of the individualistic approach is due to its objectivity, which is based on the criterion of the effective distribution of goods, proposed by V. Pareto. The most widespread utilitarian theories of the public welfare are built on the individualistic approach. In the sense of utilitarism, public welfare or social utility is a derivative of the individual welfare. The article proves that the dominant utilitarian approach does not allow to reliably estimate public welfare, since it does not take into account the supraindividual characteristics of public relations. The individual welfare is a derivative of his estimation by the social group, which reflects the dominant social views. The public welfare functions must be built on a different theoretical basis to estimate specific measures of economic policy.
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