Economists use tastes as a source of information about personal welfare and judge the effects of policies upon preference satisfaction; neoclassical welfare economics is the analytical embodiment of this preference sovereignty norm. For an initial distribution of wealth, the welfare-maximizing outcome is the one that exhausts all possible gains from trade. Gains from trade are defined relative to fixed ordinal preferences. This analytical apparatus consists of both the Pareto principle, which implies that externality-free voluntary trades increase welfare, and applied costbenefit (...) analysis, which attempts to weight costs and benefits when evaluating policies that are not Pareto improvements. (shrink)

This is a comprehensive anthology of works concerning the nature of economics as a science, including classic texts and essays exploring specific branches and schools of economics. Apart from the classics, most of the selections in the third edition are new, as are the introduction and bibliography. No other anthology spans the whole field and offers a comprehensive introduction to questions about economic methodology.