Incidentally, Gary Drescher makes the same (citation free) statement in a footnote in Chapter 7 - Deriving Ought from Is:
Utilitarian bases for capitalism—arguments that market forces promote the greatest
good—are another matter, best suited for other books. For here, suffice it to note
that even in theory, an unconstrained market does not promote the greatest good
overall, but rather the greatest good weighted by the participants’ relative wealth.
I remember asking for a reference about a year ago on LWIRC, but that didn’t help much.
Brad DeLong wrote in 2003 that “the market system’s social welfare function gives each individual a weight inversely proportional to his or her marginal utility of wealth”, which he found “a completely trivial result”! Here is his algebra. Last year he pointed to Takashi Negishi as someone who published the result in 1960.
Edit: though to get the result that the weights are proportional to relative wealth you have to add the assumption that utility goes as log wealth.
Incidentally, Gary Drescher makes the same (citation free) statement in a footnote in Chapter 7 - Deriving Ought from Is:
I remember asking for a reference about a year ago on LWIRC, but that didn’t help much.
Brad DeLong wrote in 2003 that “the market system’s social welfare function gives each individual a weight inversely proportional to his or her marginal utility of wealth”, which he found “a completely trivial result”! Here is his algebra. Last year he pointed to Takashi Negishi as someone who published the result in 1960.
Edit: though to get the result that the weights are proportional to relative wealth you have to add the assumption that utility goes as log wealth.
Nice find. Yeah, Gary and I are often in agreement :-)