Abstract
The umbrella covering the various pieces of economic theory is called welfare economics. It provides the basic framework for applying the tools of economics to policy including cost-benefit analysis of environmental policies and economic models of sustainability. Welfare economics provides the basic worldview of economists; giving answers to fundamental questions regarding the ultimate purpose of economic activity and the best policies to promote human well-being. For most of the twentieth century economic theory was dominated by a type of welfare economics called Walrasian economics, named after the 19th century political economist Léon Walras. The cornerstone of Walrasian economics is a theory of human preferences embodied in economic man or Homo economicus. Starting with the assumption that social welfare can be evaluated by summing the preferences of isolated, selfish individuals, Walras and his followers constructed a mathematical model of economic general equilibrium that defined the optimal allocation of scarce resources among alternative ends (Gowdy 2009).
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Gowdy, J.M. (2011). Economy, Ecology and Sustainability. In: Schwarz, A., Jax, K. (eds) Ecology Revisited. Springer, Dordrecht. https://doi.org/10.1007/978-90-481-9744-6_28
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