Discuss the basic difference in approach adopted by Pigou and Pareto to deal with problems of welfare economics.

The contribution of Pareto: The ordinal utility and the reconstruction of consumer theory.

Pareto rejects with emphasis the use of the term utility, but it is only a question of terminology, rather irrelevant, that should be made clear. In his Manual .., Pareto is allowed to replace “utility” with “ofelimidad”. According to him, the first term sins because of its lack of neutrality because it allows us to think that the satisfaction of needs does not rest more than in the objective properties of things. But, this need is in the capacity of a good to subjectively satisfy a need. It is this relationship between man and things that according to him (and almost everyone else) must be taken into account. Admitted this point, the following are the definitions regarding the ofelimity: “for an individual, the ofelimidad of a certain amount of a thing added to another quantity of another thing already possessed (that can be equal to zero) is the pleasure that try this quantity … If this quantity is very small (infinitely small), and if one divides the pleasure that this quantity seeks by the quantity of the same thing, we obtain the elementary ofelimity. “Finally, if we divide the elementary ofelimity by the price we will obtain the weighted ofelimity “(chapter 3). In short, the Pareto language is no more than a transposition of known notions: the notions of utility, marginal utility and weighted marginal utility correspond to the ofelimity, elementary ofelimity and weighted ofelimity. Whenever we remember the subjective aspect of needs, this question of vocabulary is completely secondary.