Abstract
The ultimate objective of all economic activity is to provide satisfaction or utility to consumers. This message has been the guiding principle for the studies of the economy from the time of Adam Smith through John Maynard Keynes.
M. G. Garnsey and J. Hibbs (eds) Social Sciences and the Environment (University of Colorado Press, 1968).
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L. Robbins, An Essay on the Nature and Significance of Economic Science, (London: Macmillan, 1952) 2nd edn, p. 16.
J. M. Keynes, The General Theory of Employment, Interest and Money, (New York: Harcourt Brace, 1936) p. 40.
A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, (New York: Modern Library, 1937) p. 28.
J. Robinson, Economic Philosophy, (Chicago: Aldine, 1962) p. 47.
P. A. Samuelson, Foundations of Economic Analyses, (Cambridge, Mass.: Harvard University Press, 1947).
P. A. Samuelson, ‘The Pure Theory of Public Expenditure’, Review of Economics and Statistics, 38 (November 1958) pp. 388–9.
A. Marshall, Principles of Economics, (New York: Macmillan, 1950) 8th edn, p. 92.
If maximization of the total utility of society is the goal of the economic system, then the value in use concept rather than the value in exchange idea should be the focal point. Most cost-benefit studies, however, tend to centre on value in exchange as a measure of benefits despite ‘the inapplicability of the assumptions required to draw inferences about total utility from a study of market prices. As Keynes pointed out, we are not in a position to compare the total ability due to the availability of dear fuel and cheap ice to the Laplanders and cheap fuel and dear ice to the Hottentots’. (See J. M. Keynes, A Treatise on Money, (London: Macmillan, 1930) p. 104.
A. C. Pigou, The Economics of Welfare, (London: Macmillan, 1920).
A. P. Lerner, The Economics of Control, (New York: Macmillan, 1994) p. 1.
J. K. Galbraith, The Affluent Society, (New York: Houghton Mifflin, 1960) pp. 139–151.
P. Davidson, F. G. Adams, and J. Seneca, ‘The Social Value of Water Recreational Facilities Resulting from an Improvement in Water Quality in an Estuary: The Delaware Case Study’, in A. V. Kneese and S. Smith (eds), Water Research, (Baltimore: Johns Hopkins University Press, 1966) (Chapter 34 in this volume).
F. Bator, ‘The Anatomy of Market Failure’, Quarterly Journal of Economics, 72 (August 1958) p. 351.
B. A. Weisbrod, ‘Collective-Consumption Services of Individual-Consumption Goods’, Quarterly Journal of Economics, 78, (August 1964), pp. 471–2.
There will still remain some categories of infrequently purchased durable goods that are not easily categorized as either public or private goods only, for example, fashion-oriented durable goods. In the case of fashion-oriented goods, obsolescence because of fashion changes may increase the user costs of inventory sufficiently to make the carrying of inventory economically undesirable even if physically possible. An obvious example is the daily newspaper. Can such goods be left to a private market? Fuller analysis of the time dimension of product markets is essential in welfare economics. For an interesting discussion of the time dimension aspects see S. Weintraub. Price Theory, (New York: Pitman, 1949) Chapter 17.
O. Eckstein, Water Resource Development, The Economics of Project Evaluation, (Cambridge, Mass.: Harvard University Press, 1958), pp. 24–5.
The benefits from a world of abundance may indeed be very small. For a frightening description see J. M. Keynes, Essays in Persuasion, (New York: Norton, 1963), p. 368ff.
J. Robinson, Economic Philosophy, (Chicago: Aldine, 1962) p. 111.
R. Thomann, Delaware Estuary Comprehensive Study, (Philadelphia: Federal Water Pollution Control Administration, 1966).
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Davidson, P. (1991). The Valuation of Public Goods. In: Davidson, L. (eds) Inflation, Open Economies and Resources. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11516-7_35
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