A contribution to the theory of welfare accounting

A kind of "unified theory" is proposed as a dynamic generalization of the s tandard consumer-surplus methodology for evaluating welfare changes. The "u nified theory" allows rigorous dynamic welfare comparisons to be inferred b etween any two economic situations-from just knowing current incomes and ob serving a short-run market demand schedule. Essentially, the change in pres ent discounted future utility is exactly captured by the formula: differenc e in current income plus consumer surplus. This well-known formula is there by shown to cover a far wider class of welfare comparisons than is customar ily treated in the textbook static case.