The Economic Role of Government as, in Part, a Matter of Selective Perception, Sentiment and Valuation: The Cases of Pigovian and Paretian Welfare Economics

This essay identifies and explores the role of selective perception, sentiment and valuation in the formation of economic policy, with particular reference to the conduct of policy-making under the aegis of Pigovian and Paretian welfare economics. First, we identify certain background conditions. Second, we present an argument with regard to the economic role of government. Finally, we apply the argument to Pigovian and Paretian welfare economic reasoning, showing first the equivalence of Pigovian and Paretian reasoning under particular assumptions and their non-equivalence under more realistic conditions, and then how the latter results give rise to selective perception, sentiment and valuation in the formation of economic policy.