Unveiling Social Choice: from Arrow's Impossibility Theorem to Modern Welfare Economics

One of the essential problems of welfare economics is to explain the existence and decision mechanism of possible social welfare criterions that play a great role in social life. The systematic solution to this problem is obtained by modern welfare economics after a complicated groping experience following Arrow's impossibility theorem. This paper investigates the contributions of Arrow's theorem and formulates the groping experience into three clews, which may help to clarify how economists uncover the mysterious veil of social choice and solve the essential problem of welfare economics.