Scitovsky paradox

The Scitovsky paradox is a result in welfare economics which states that there is no increase in social welfare by a return to the original part of the losers. It is named after the Hungarian born American economist, Tibor Scitovsky.

What Scitovsky demonstrated was it is possible that if an allocation A is deemed superior to another allocation B by the Kaldor compensation criteria, by a subsequent set of moves by the same criteria, we can prove that B is also superior to A.

The paradox occurs when the gainer from the change of allocation A to allocation B can compensate the loser for making the change, but the loser could also then compensate the gainer for going back to the original position.

Economic paradoxes (list)

Allais Antitrust Arrow information Bertrand Braess' Competition Income and fertility Downs–Thomson Easterlin Edgeworth Ellsberg European Gibson's Giffen good Icarus Jevons Leontief Lucas Mandeville's Mayfield's Metzler Plenty Productivity Prosperity Scitovsky Service recovery St. Petersburg Thrift Toil Tullock Value

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Scitovsky paradox

Further reading