Executive Summary Is there a possibility of social choice? Yes, claims Amartya Sen 1998 in his Nobel Prize Lecture and challenges Arrows impossibility theorem.

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The Possibility of Social Choice – A Critical Review                

  1. Executive Summary

Is there a possibility of social choice?

Yes, claims Amartya Sen 1998 in his Nobel Prize Lecture and challenges Arrow’s impossibility theorem.

On the basis of an extensive interpretation of the origins of social choice theory as well as of the different approaches to the subject matter since the French Revolution, Sen demonstrates why and how a pessimistic view on social choice theory gain wide acceptance among contemporary scholars – and why it may be wrong. Declaring welfare economics as a core theme of social choice theory, the economist primarily focus on deliberations in that respective field.

In a first step, Sen confronts social choice theory with utilitarianism – according to him one of the most influential schools of thoughts shaping the approaches to welfare economics. By doing so, the economist stresses the circumstance that utilitarianism similar to the vote-oriented social choice theory – as he puts it – has a deep interest in using a class of information in the form of comparison of utility gains and losses of different person. However, contrary to social choice theory, utilitarianism would declare the sum of total utility of a community – irrespective the distribution - as its main concern. Subsequently Sen argues that in the wake of scholars such as Robbins who raised doubts about the scientific foundation interpersonal comparisons of utility, conceptions of “new welfare economics” such as the credo of “pareto-effiency” arose. This new approach to welfare economics was coined by a reduced informational base on which social choice could draw. The use of different persons’ utility rankings without any interpersonal comparison became the only valuable starting point of reflections on welfare. Pointing at the inadequacy of such approaches, leaving distributional issues out of consideration, scholars such as Bergson and Samuelson postulated that further criteria would be needed to make social welfare judgments and paved the way for Arrow’s conception of the “social welfare function” and of the related impossibility theorem – a fallacy in Sen’s eyes.

By emphasizing the feasibility of “interpersonal comparability” as well as its potential to make a major difference to the informational basis of reasoned social judgments, Sen refrains from this pessimistic view reflected in Arrow’s theorem - and postulates the possibility of social choice theory due to the process of informational broadening. In his efforts to prove such a possibility of reliable interpersonal comparisons Sen accentuates the complementary of formal methods and informal reasoning as well as the general relationship between possibility and impossibility results. The economist claims that the ubiquity of impossibility would not constitute the real issue, since it will always lie close to the axiomatic derivation of any specific social choice rule. The reach and reasonableness of the axioms used, however, is much more decisive. In the view of this assumption, Sen proclaims that the elaboration of workable rules that satisfy reasonable requirements must go on.

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Discussing the nature of majority decisions, he concludes that the necessary and sufficient conditions for consistent majority decisions can be identified - although they were quite demanding and easily violated in many actual situations in reality. With this in mind, the economist argues that a domination of distributional issues in the context of a majority decision implies a strong tendency to inconsistency. However, in different situations, for example in case of an emergency –affecting all members of a society – majority decisions may lead to consistent results. Merging this argumentation with the centrality of distributional issues in welfare-economic problems, Sen ...

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