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The branch of economics which is concerned with the way economic activity ought to be organised so as to maximise economic welfare. The idea applies to the welfare of individuals as well as countries.
This is normative economics, i.e., it is based on value judgements. It is also
called ‘economics with a heart’. This focuses on questions about equity as well as efficiency.
It employs value judgements about what ought to be produced, how production should be organised, the way income and wealth ought to be distributed, both in present times and in future. As different individuals in different communities have unique set of value judgements (guided by their attitutdes, religion, philosophy, and politics) it has been difficult for the economists to reach a consensual idea upon which they could advise the governments in policy making, known as the welfare criteria. Economists and philosophers have been suggesting their brands of the welfare criteria since long–Vilfredo Pareto, Nicholas Kaldor, John Hicks, Scitovsky, Amartya Sen, as the few famous ones.