Economists who make normative proposals traditionally assume that policy should advance “efficiency,”usually in the Kaldor or Hicks sense, which defines efficiency in terms of whether the project's winners can hypothetically compensate the project's losers.A compensation criterion is used because it can be based on ordinal utilities, which puts a smaller information burden on the decision maker than cardinal utilities do.Ordinal utilities, unlike cardinal utilities, can (in principle) be inferred from observations of consumer behavior.By seeing how people trade off goods, willingness-to-pay (or willingness-to-accept) amounts can be derived and summed, so that alternative policy outcomes can be easily compared.展开