Did I explain how normative statements are resolved and the differences between pareto and cost benefit analysis?
To resolve normative statements when comparing social states, pareto or cost benefit analysis takes place. Pareto criterion can make social states either all better off or make them all worse off (not based on equity). While the cost benefit analysis, there must be a trade-off. For example, if one state is better off, the other state is worse off.
I'm not sure what you are asking. That said, in cost-benefit analysis doesnt necessarily mean if one gains someone else must lose.
A coomon social policy question asks whether some change in policy is a good idea or not. Under a pure pareto requirement you would have to show that some are better off and nobody is worse off. Under a cost-benefit analysis you would need to show that the benefits to the winners exceeds the loss to the losers. This latter is very difficult unless you can measure inter-personal utilities (which you cannot). So, to say, using cost-benefit analysis, some policy change is a good idea is a normative statement -- it is based on judgement about notions of all sorts of things; fairness, equity, rightousness, etc.
Based on the information you provided, you did explain the concepts of normative statements, Pareto criterion, and cost benefit analysis, although there is some room for further clarification.
Normative statements are statements that express subjective opinions about how things should be. These statements involve value judgments or personal beliefs and cannot be proven or disproven.
To resolve normative statements when comparing social states, two commonly used methods are Pareto criterion and cost benefit analysis:
1. Pareto Criterion: The Pareto criterion is a principle named after the Italian economist Vilfredo Pareto. According to this criterion, a social state is considered to be an improvement over another one if it makes at least one person better off without making anyone else worse off. In other words, a Pareto improvement occurs when it is possible to make one person better off without harming anyone else in society.
2. Cost Benefit Analysis: Cost benefit analysis is a technique used to assess the potential benefits and costs of a decision or policy. It involves assigning monetary values to both the positive and negative consequences of a decision and comparing the total benefits to the total costs. A decision or policy is considered justified if the overall benefits outweigh the costs. However, in cost benefit analysis, it is not necessary to make everyone better off; trade-offs are inherent in the analysis.
In terms of the differences between the two approaches:
- The Pareto criterion focuses on making at least one person better off without making anyone else worse off, without considering equity or distributional concerns.
- In cost benefit analysis, there is a trade-off: if one state is better off, the other state is worse off. It involves comparing the overall benefits and costs of a decision or policy, taking into account many factors beyond just making individuals better off.
To further solidify your understanding of these concepts, it could be helpful to provide more specific examples or describe how these methods are applied in practice.