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The first sentence in the article is: "Deadweight loss ... is a measure of lost economic efficiency when the socially optimal quantity of a good or a service is
by lisper 4y ago
The first sentence in the article is: "Deadweight loss ... is a measure of lost economic efficiency when the socially optimal quantity of a good or a service is not produced."
But there is no link for "socially optimal", and the phrase appears nowhere else in the article, so this definition is incomplete at best and vacuous at worst because its meaning turns entirely on the meaning of "socially optimal" but I can't think of any reasonable way to define it that is not a judgement call.
- colinmhayes 4y agoYou are right, wikipedia is not a great source for economics. I just reached for it first because it's generally decent for most things. You can find a great definition in https://bankicollege.ac.in/wp-content/uploads/2020/12/Principles-Of-Microeconomics-Mankiw.pdf https://bankicollege.ac.in/wp-content/uploads/2020/12/Princi... but simply it's difference between the surplus before and after an intervention. Obviously minimizing deadweight loss isn't our end goal, it's just one measure we can use to compare interventions.
- Hermitian909 4y agoWhile not an economist, I've read enough economic papers that I actually agree with Wikipedia's definition. You can "plug-in" values to your dead weight loss calculation depending on judgement calls. For example, do you consider the fact that the carbon footprint of an object is ignored a subsidy? If so, your dead weight loss calculation changes. Suddenly you're trying to discount cash flow against the future cost of carbon removal and things are very complicated.
- mr_toad 4y ago> when the socially optimal Technically Pareto optimal. Pareto optimal points are not necessarily socially optimal. https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency