WELFARE CRITERIA AND CHANGING TASTES.

This article deals with the problem of the welfare evaluation of income when consumer tastes change. Conventionally, individual economic welfare depends on individual real income, and changes in economic welfare are evaluated on the assumption that individual tastes remain fixed. The evaluation of well-being when tastes have changed has not been satisfactorily dealt with, and very little is known about the conditions of taste-change. In this paper, the author deals with those situations in which individual tastes do change, not only as a result of changes in the autonomous cultural determinants of taste, but as a result of ordinary economic activity in which income is gained and used in response to existing tastes. Utterly implausible contrasts in the conditions of well-being are implied by available real-income measures of welfare in the comparison of people of an industrial society with people of a pre-industrial society. One of the reasons for suspecting that tastes do not stay put is that often the very policies and other reorganizations which produce significant changes in real income are themselves responsible for changes in tastes. In order to avoid the inadequacies of the conventional definition of economic welfare, in which income and economic welfare are loosely synonymous, the author proposes to assert that economic welfare depends on both real income and the level of aspiration for real income.