1. Consider the memo from Larry Summers to his colleagues at the World Bank. According to Hausman and McPherson, upon what controversial philosophical choices does the impeccable economic logic of Summers argument rely?2. Explain the idea of Pareto optimality? What guidance, if any, can Pareto optimality provide to philosophical theories of justice? What are the limitations of Pareto optimality in debates about which economic and political policies a society ought to adopt?3. Explain what is frequently referred to as the First Welfare Theorem in economics.What are the implications of this fact for attempts to promote justice or efficiency through public policy4. Compare and contrast ethical utilitarianism and contemporary cost-benefit analysis. In what ways are they similar? How do they differ? Be sure to consider differences in understanding of welfare and the aims of public policy. Why, according to Lionel Robbins and others, should contemporary economics reject ethical utilitarianism?5. If welfare as understood as preference satisfaction, it is virtually impossible to make interpersonal welfare comparisons. As a result, welfare economists frequently adopt willingness to pay as a kind of shorthand for (or approximation of) preference satisfaction. Why might an economist think that willingness to pay is a useful approximation for preference satisfaction? Explain at least two common concerns with using willingness to pay in cost-benefit analysis.
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