The post is Abba Lerner’s final examination at Johns Hopkins University in 1958. The subject is welfare economics. I hope this doesn’t create legal problems of any sorts, but I’m reproducing below the full paper:
Answer four questions, in separate blue books, in ink.
https://www.irwincollier.com/johns-hopkins-exam-for-welfare-economics-lerner-1958/
- Discuss the meaning, the validity and the significance of the proposition that it is impossible to derive a social welfare function from individual preference functions.
- How far can one carry the analogy between a political voting procedure and the economic price mechanism, and between the rationale of voting between alternative policies and that of allocating dollars between alternative purchases?
- Discuss the rational elements in relation to other elements in the social objectives of optimum distribution of income, optimum population, and optimum rate of saving.
- What is sound, what is unsound, and what is useful in the doctrine of consumers’ surplus?
- Why is it socially desirable to have the prices of products equal to the value of the marginal factors used in their production? How is this objective affected by equity elements such as the need for subsidies?
- Under what conditions would a partial freeing of trade be harmful to society in the largest sense? In your answer explain the treatment of this problem in terms of “second best” and the use of the concept of “divergence”.
- Compare the arguments for the imposition of trade restrictions for the sake of affecting the international terms of trade with those undertaken for the sake of affecting the domestic distribution of income. Give special attention to the interdependence of efficiency and equity considerations.
If you are a masters level student, you will enjoy answering (or having ChatGPT answer) these questions, and I hope you try either one of these options. But on the other hand, if you are an undergraduate student, or an amateur fan of economics, here are some prompts you might want to use:
- You are a professor of the history of economic thought, with a keen interest in how the field of economics has developed, especially in the 20th century. You are well aware of the famous economists of this era, their main contributions, and the main schools of thought that have developed in this period. Explain to me what welfare economics is, why it mattered when it was first developed, and why it matters now. In light of your answer, choose three questions from this blogpost that are worth discussing, and give me your take on them. It will help if you contextualize your answers by assuming I am an Indian with a somewhat basic understanding of economic theory.
- What are social welfare functions, and why do they matter in economics? What was the basic problem that was being tackled when folks came up with the idea of social welfare functions? How are social welfare functions different from individual preference functions? In your answer, explain like you would to a curious fifteen year old.
- What does “socially desirable” even mean in the context of economics? Whatever your answer, how does equating the price of products to the value of the marginal factors used in their production help? When you answer this question, please use a simple example that I can follow.
- What are efficiency and equity considerations in economics? What is the link between international trade and welfare economics? Explain with the help of an example that makes sense to me in the year 2023.
- My professor has given me an assignment: I have to design one more question to add to this question paper, in addition to the seven that are already there. I have to explain why I added this question, and I have to answer it. Please do all of these things for me? Note that I am an Indian student, currently studying in the sixth semester of an Indian undergraduate course.
EconForEverybody 