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Dilfraz Singh, Lovely Professional University Unit-3: Economic Welfare and National Income

Unit-3: Economic Welfare and National Income Notes

Contents
Objectives
Introduction
3.1 What is Economic Welfare?
3.2 Relation between Economic Welfare and National Income
3.3 National Income as a Measure of Economic Welfare
3.4 Summary
3.5 Keywords
3.6 Review Questions
3.7 Further Readings

Objectives

After the study of this unit, student will be able to:
y To know economic welfare,
y To study of national income,
y To know about factor affection social welfare.

Introduction

It is not right to differentiate between economic and non- economic welfare, on the basis of money
Pigou accepts this matter also. According to him non- economic welfare can be corrected by two
types. Firstly, by the method of earning of income. Excess working hour and bad condition will less
non- economic welfare. Secondly, by the method of expenditure of income. It is assumed is economic,
welfare that expenses on various consumption goods, gives equal satisfaction, but in fact, it is not
happen as such, because when form purchased goods gets less satisfaction then non- economic
Satisfaction is lass by that total welfare is less also,

3.1 What is Economic Welfare?

It is necessary to define economic welfare before to know the relationship between economic
welfare and national income. ‘Welfare’ is a mental state which is indication of human happiness and
satisfaction. In fact, welfare is a happy stage of human mental state. Pigou assumes personal welfare
is total sum of satisfactions experiences by person end social welfare is the sum total of individual
welfares. He divides welfare in economic welfare and non- economic welfare. Welfare is that part of
social welfare which can be measured directly or indirectly in terms of money since welfare term is
much wide; therefore Pigou gives importance to economic welfare. In his words”. Our limitation of
test is limited to that part of social (general) welfare which can be directly or indirectly come together
measurment of money”. Just its contrary non- economic welfare is that part of social welfare which
can not be measured in terms of money, as a moral welfare.

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