To quantify this economic value, economists simply add up the value created for all participants (or bystanders) in the market. By doing so, economists can calculate the economic impact of taxes, subsidies, price controls, trade policies, and other forms of regulation (or deregulation). That is to say, there are some things to keep in mind when reviewing such an analysis. First, because economists only add up the value created by each market participant (US dollars), they implicitly assume that the value of Bill Gates or Warren Buffett is equivalent to the value of a person pumping Bill Gates gasoline. Or Warren Buffett drinks coffee in the morning. Similarly, welfare analysis typically aggregates the value of consumers in the market with the value of producers in the market. By doing so, economists also assume that the dollar value of a gas station attendant or barista is the same as the value of a large company shareholder. (However, if you consider the possibility that the barista is also a shareholder of a large company, this is not as unreasonable as it initially seemed.) Second, the welfare analysis only calculates the dollar amount in the tax, not the value tax. . Ideally, tax revenues will be used for projects that are more costly to society than taxes, but this is not the case. Even so, it is difficult to ultimately tax the specific market and the tax revenue of the market for social purchases. Therefore, economists deliberately separate the analysis of how much tax is generated and the value of consumption of these tax funds. When reviewing the economic welfare analysis, it’s important to keep in mind that these two issues are important, but they don’t make the analysis irrelevant. Conversely, understanding how much value (or creating or destroying it through regulation) in the total amount created by the market helps to correctly assess the trade-off between overall value and fairness or equity. Economists often find efficiency, or maximize the overall size of the economic cake, inconsistent with some fair concepts, or divide the cake in a way that is considered fair, so it is crucial to be able to quantify at least one of the keys. trade off. In general, textbook economics draws positive conclusions about the overall value of market creation and allows philosophers and decision makers to make normative statements about what is fair. Nonetheless, it is important to understand the extent to which economic cakes shrink when implementing “fair” results to determine if the trade-offs are worthwhile.