A proposal for more sophisticated normative principles in introductory economics

ABSTRACT

Introductory textbooks teach a simple normative story about the importance of maximizing economic surplus that supports common policy claims. There is little defense of the claim that maximizing surplus is normatively important, which is not obvious to non-economists. Difficulties with the claim that society should maximize surplus are generally not addressed. Economists are thus frequently criticized by non-economists for having a poor moral foundation for our normative claims. We should tell a more sophisticated normative story that justifies the moral importance of surplus, but acknowledges that other moral values may conflict with generating surplus and that distribution is not always separable from efficiency. This would allow students to make more compelling arguments in favor of normative positions they accept, regardless of the values they hold.

KEYWORDS:

• Efficiency
• normative economics

JEL CODES:

• A13
• A20

Notes

1. The figure assumes that the marginal utility of surplus is constant, so that the utility frontier is a straight line. This simplifies the drawing of this figure and figure 2, but is not essential to the argument. If the marginal utility of surplus were decreasing, then the frontiers would be curves rather than straight lines, but the frontiers would still cross, and the essential argument would remain the same.