Social wellbeing : an agenda for economic research in Malta

Abstract

While some people may find it surprising that economists are concerned with subjects like social wellbeing, the truth is that wellbeing is at the very heart of the subject of Economics. Economics is the study of choice under conditions of scarce resources. More specifically, the subject is concerned with how to allocate scarce (natural, human, capital) resources in society, in order to maximise the wellbeing of society as a whole and of different groups within it. In fact, a core question asked in both microeconomics (the study of individual markets) and macroeconomics (the study of the economy as a whole) is whether market forces are capable of achieving the so-called “Efficient” allocation of resources - that is the allocation that maximises wellbeing (Pareto 1896). Most economists now agree that if markets are left to operate freely, they fail to reach that objective, and that some level of government intervention is necessary to regulate what Adam Smith, forefather of Economics, had referred to as an “Invisible Hand” of the market (Smith, 1776).