Principles of Maximum Social Advantage.pptx

Neither of excess is good for the society, it has to be balanced to achieve maximum social benefit. Dalton called this principle as "Maximum Social Advantage" and Pigou termed it as "Maximum Aggregate Welfare". It was introduced by Swedish Economist "Erik Lindahl in 1919". See my ppt for additional details.

1. Principles of Maximum Social Advantage Dr. T. AASIF AHMED DEPT. OF ECONOMICS MAZHARUL ULOOM COLLEGE AMBUR-635802 TAMIL NADU M. NO: 9944029901 E-MAIL ID: [email protected]

2. Principle of MSA The 'Principle of Maximum Social Advantage (MSA)' is the fundamental principle of Public Finance. The Principle of Maximum Social Advantage states that public finance leads to economic welfare when public expenditure & taxation are carried out up to that point where the benefits derived from the MU (Marginal Utility) of expenditure is equal to the Marginal Disutility or the sacrifice imposed by taxation. Hugh Dalton explains the principle of maximum social advantage with reference to Marginal Social Sacrifice (MSS) and Marginal Social Benefits (MSB). Prof . Pigou describe as principle of Maximum Aggregate Welfare.

3. Conditions/Assumptions Necessary for Maximum Social Advantage The MSB and MSS should be equal. The MSB derived resulting from each item of public expenditure must be equal. The marginal sacrifice of taxation of each tax-payer should be equal.

4. Objective Tests of Social Advantage Political stability is the basic condition of attainment of maximum social advantage. Improvement in production is a necessary condition which requires increase in productive power in order to obtain large product with minimum effort and improvement in organization of production. Improvement in distribution which implies reduction in income inequality Economic stability indicating less fluctuations and a stable atmosphere for economic agents Attainment of full employment as it favors increase in production and promotes greater equality of income

5. Musgrave’s View

6. Cont. Musgrave has explained the situation of maximum social advantage with a different diagram.   M aximum social advantage is achieved at where nsb is zero. The NSB is the difference between MSB and MSS.

7. Mrs. Hicks Optima of Public Policy Public policy is the framework of laws, regulations, and actions governments implement to achieve social and economic goals. Mrs . U.K. Hicks has also suggested two sets of criteria for judging whether a particular public finance operation or policy would add to the net social benefit (NSB) or not. They are called the production optimum and utility optimum respectively.

8. References Cambridge University Libraries,  Shirras , George Findlay, 1885–1955 (economist) , accessed 4 June 2023 "Budget transparency - OECD" .  www.oecd.org .  Archived  from the original on 28 November 2022. Retrieved 28 November 2022. Muley , Ritika (29 January 2016).  "Public Expenditure: Causes, Principles and Importance" .  EconomicsDiscussion.net . Retrieved 25 April 2021 . Irvin, Tucker (2012).  Macroeconomics for Today  (8th ed.). Mason, OH: Cengage Learning.  ISBN   9781133435051 .  OCLC   830731890 .