Arrow Social Welfare Function (constitution)
Kenneth Arrow (1963) generalizes the analysis. Along earlier lines, his version of a social welfare function, also called a 'constitution', maps a set of individual orderings (ordinal utility functions) for everyone in the society to a social ordering, a rule for ranking alternative social states (say passing an enforceable law or not, ceteris paribus). Arrow finds that nothing of behavioral significance is lost by dropping the requirement of social orderings that are real-valued (and thus cardinal) in favor of orderings, which are merely complete and transitive, such as a standard indifference-curve map. The earlier analysis mapped any set of individual orderings to one social ordering, whatever it was. This social ordering selected the top-ranked feasible alternative from the economic environment as to resource constraints. Arrow proposed to examine mapping different sets of individual orderings to possibly different social orderings. Here the social ordering would depend on the set of individual orderings, rather than being imposed (invariant to them). Stunningly (relative to a course of theory from Adam Smith and Jeremy Bentham on), Arrow proved the General Possibility Theorem that it is impossible to have a social welfare function that satisfies a certain set of "apparently reasonable" conditions.
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