COWLES FOUNDATION For Research in Economies at Yale University ‘The Cowles Foundation for Research in Economies at Yale University, ‘established ar an activity of the Department of Enomics in 1955, has ‘sits purpose the conduct and encouragement of research in economics ‘and related social eciences with particular emphasis on the develop- ‘mentand application of logical, matheratical, and statistical methods ‘otanalysin The profeesional research staff have, a8 a rule, © depart- ‘mental appointment and some teaching responsibility "The Cowles Foundation continues the work of the Cowles Commis- sion fr Research in Eeonotes founded in 1992 by Alfred Cowles at (Colorado Springs, Colorado. The Commission moved to Chicago in 1999 and was alited withthe University of Chicago until 1985.In 1955 the profesional research staf of the Comminaion acepted ap- ointments a Yale and, slong with other members ofthe Yale Dopart- ‘ment of Economics, formed the research staff ofthe newly established (Cowles Foundation ‘A ist of Cowles Foundation Monographs appears atthe endof this volume 497% ol -33 SECOND EDITION Social Choice and Individual Values Kenneth J. Arrow ‘New Haven and London, Yale University PressConright, 181 ©1863 by Cones Fondation for ‘Reatarchin Eonomicat Yale Unversity Originally published by Jahn Wiley & Sone, Aleghte reserved Thiook may not be epredaced,in whale rin prt many orn (teyond hat copying permite by Sections 107 and 108 the US. Copyright Law and exept by ‘reviewers oth pai pres withowt writen ermiaen er the pbtisere Internationa standard book number ‘Sis-0°300-U1364- (paper ‘6300-01364 pape) Printed inthe United Sate Ameren by ‘Courier Companies, Ine To Selma, my wifeCnarres 1 INTRODUCTION 1. Tux Tres or Secu. Caorce aa capitalist dmoemay there are eesentilly two methods hy which social choices can be made: voting, typically used to male “polite” ‘econ, and the market mechanion,typialy vod tomake “economic” ‘decision. Inthe emerging democracies with mixed economic systems, ‘Great Brian, Fence, and Seandinavis, he same two moda of making ‘cca choles prevall bough more ope given othe metod of voting od decisions based direty o indretiy omit and este the rule of the prise mechani. Eaewhere in tbe world, and eve in amaler ‘sil uats within th democracies soil deesions ar metines made ‘by single ndividuala or small groups and sometines (moe and mare ‘ately in this odor werk) by a widely encompassing otf tredltionl ‘lifer mang i nol ls in ay en ane, ef reo "Tas at wo meh fang nce te aa et ee pp eopmen cating niet a doom Tiere eae ‘alsa rem of anime detonate inet oral danme tans he anes ered nus yim ‘tepetsaorip‘Te goede errata cntens te ad 22 ‘Sacer tv tw crib ‘ke pean tine mht sea Bape at tn fa narrate ‘mgt tt slang trough se Smeal peer opel, fos da” "Orit cx hype tha intarptation psf he hana of te pops uty cd ot tsa nrg anon denne ooo te, 1 ante mene ef oni aes he rota iene ceiLeMgh elec ind ttre ie 1 Pern, gos ‘te Peo Capon, Loon 1 Bary, 184 pp. 00. Be ore ty, (Shite cee thera dca ote ered eat te nee ps ote hands seiner sal upsell” "Phe eatin of methods of alc nba apc to Peer aight deine ano cam aut Snd wns ae ta 1S ‘sideman neh re agro gad ie are Kaigh, ‘Shen Nae Sad Won Beaecvn”t Prise Br, New Yor rial Bc, Yer we ts