The old and the new welfare economics
At the turn of the century, Vilfredo Pareto introduced the concept of ophelimity in economics. Ophelimity differs from utility, which is a richer sociological concept that may be hard to tackle with scientific rigor.
On the basis of scientific criteria, Pareto encouraged narrowing the amount of information we could derive from it: it should be an ordinal concept, and interpersonal comparisons of ophelimity ought to be ruled out.Had the term “ophelimity” not been retained afterwards, this watershed would have been confirmed by the publication of Lionel Robbins’s famous 1932 book, An Essay on the Nature and Significance of Economic Science, in which he disputed the meaning of interpersonal comparisons of utility and the material definition of economics. As far as a subjective account of utility holds, there exists no way, whether by introspection or by observation, to compare the intensity of satisfactions of two different persons (Cooter and Rappoport 1984). If assertions implying the meaning of cardinal utility or of comparisons, such as the rule of decreasing marginal utility, are formulated, they necessarily derive from a value judgement. Notwithstanding, if economics claims to remain a science, hence to be value neutral, such comparisons should be absolutely avoided.
Paul Anthony Samuelson (1947: 249) draws the consequences of the ban of interpersonal comparisons of utility, as well as of the restrictions of utility to the scientific theory of demand, by distinguishing the old from the new welfare economics:
While in a real sense there is only one all-inclusive welfare economics, which reaches its most complete formulation in the writings of Bergson, it is possible to distinguish between the New Welfare Economics... which makes no assumptions concerning interpersonal comparability of utility, and the Old Welfare Economics which starts out with such assumptions.