The Pareto criterion is named after Vilfredo Pareto (1848–1923), the Italian economist and sociologist. In its simplest and mostimpractical form, the Pareto criterion declares that ‘society’ is better off if some individuals in society prefer the new situationto the old, and no one ‘disprefers’ it. The rule is impractical because virtually all change involves someone being a loser. The benefit–cost compensation rule therefore replaces the rule with the modified form introduced by Kaldor and Hicks, i.e. that society is betteroff provided gainers can compensate losers and still have net gains.