Is it useful to recall Adam Smith's genuine, 14-carat DEFINITION of 'real wealth' as 'the annual produce of the land and labour of the society'? By doing so we relate it immediately to modern macroeconomic measures such as GDP, equally applicable to either reason mentioned by Gunning. For, in his second case, if market prices accurately reflect relative marginal utilities (and if we follow Hicks in assuming that we always observe variables in the neighbourhood of their equilibrium values) a putative net welfare gain or loss must show up in the (constant price) National Accounts. If prices do not reflect relative marginal utilities there's no point in Welfare Economics at all. As an afterthought: it was also Adam Smith who first insisted that 'Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer'. Anthony Waterman