Welfare in Economics

Definition of Welfare

The welfare definition was propounded by Dr Alfred Marshall in his book Principles of Economics in 1890.

According to him, “Economics is a study of mankind in the ordinary business of life. It examines that part of individual and social actions which is most closely connected with the attainment and use of material requisites of well-being.” In this definition, he gave more importance to human welfare in comparison to wealth. He stated that wealth was only a means to satisfy human wants and not an end in itself.

Features of Marshall’s Definition of Economics

Study of material requisites of well-being: This definition indicates that
Economics deals with the material aspects of well-being. Thus, it studies the materialistic aspects of economic welfare.

Concentrates on the ordinary business of life: It shows that Economics deals with the study of man in the ordinary business of life. Thus, Economics enquires how an individual gets his income and how he uses it.

Stress on the role of man: This definition stressed on the role of man in the creation of wealth or income.

Economics is a social science: Economics does not study the
behaviour of a single person but of people living together in a society. People live together and interact with each other while working at firms, factories, shops and offices. The problems and activities arising out of these are studied by Economics.

Use of money: This definition regards material economic welfare as a part of social welfare which can be measured in terms of money.


Narrow concept of the subject: Marshall in his definition of Economics concentrated mainly on material welfare and ignored non-material welfare. As a result, the use of the word „Material‟ in his definition of Economics considerably narrows down its scope. This is because human welfare is not only affected by the amount of material goods produced and consumed but also by the amount of non-material goods produced and consumed. For example, the services of doctors, lawyers, teachers, dancers,
engineers and professors satisfy wants and are scarce in supply. Therefore, this proved to be a major drawback of this definition.

Relationship between Economics and welfare: There are many activities which do not promote human welfare but are regarded as economic activities. These include the manufacturing and sale of alcoholic goods or opium.

Welfare cannot be measured: It is a state of mind and cannot be quantitatively measured, as it is subjective. Because the exact amount of it cannot be measured and the satisfaction derived from purchases, performances and activities cannot be calculated in exact figures, only assumptions can be made. Also, it varies from person to person, place to place and age to age. For example, when two friends purchase the same good, it is impossible to identify or measure or even assume that how much welfare each is going to gain

Impractical: This definition of welfare is theoretical in nature. It is not possible in practice to divide man‟s activities into material and non-material activities.

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