A Primer in Social Choice Theory

A Primer in Social Choice Theory

A Primer in Social Choice Theory

A Primer in Social Choice Theory

Synopsis

This introductory text explores the theory of social choice. Written as a primer suitable for advanced undergraduates and graduates, this text will act as an important starting point for students grappling with the complexities of social choice theory. Rigorous yet accessible, this primer avoids the use of technical language and provides an up-to-date discussion of this rapidly developing field. This is the first in a series of texts published in association with the LSE.

Excerpt

Social choice theory is an analysis of collective decision making. the theory of social choice starts out from the articulated opinions or values of the members of a given community or the citizens of a given society and attempts to derive a collective verdict or statement. Such a situation can be called direct democracy, where public actions are determined directly by the members of society. Another form of democratic government is also possible and, actually, more frequent in modern societies, viz. representative government where public actions lie in the hands of public officials who are elected by citizens. We shall largely abstract from these two forms and say a bit later on inthis book, and this sounds, admittedly, somewhat ‘technical’, that the preferences of the individual members of a given society are ‘aggregated’ into a social preference that reflects the general opinion or will of this society.

Isn't such a procedure superfluous in an era where the market is the predominant mechanism? Not necessarily. There are quite a few issues on which decision making is done collectively. Think, for example, of defence outlays, investments within health care or in the educational sector. Other examples are the election of candidates for a political party or a committee, or, somewhat more mundanely, the choice of candidates to run a tennis club. Such decisions are an integral part of modern societies. Also, there is the possibility of ‘market failure’. the existence of externalities such as air pollution or noise may lead to serious inefficiencies so that policy measures are necessary in order to internalize these (or at least some of these) external effects. Such measures will normally be decided collectively, within a committee or by the members of a government. Very often, these decisions are complicated in the sense that a particular measure favours one group in society but is simultaneously detrimental to another group. Should free trade be promoted even if some branches within domestic industry have a high chance of going out of business? the majority of consumers will most likely favour free trade since prices may fall, thus increasing consumer surplus. But how about those who will lose their job because of massive competition coming from foreign firms that enter the market?

How can such a decision be made in a transparent and rational way? Is there a handy criterion or are there several criteria available? Is there, perhaps, a construct that one might call a social welfare function which says that the . . .

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