Amazingly Ikiesling links to a year old post here.

Had to reciprocate.

My post wasn't really about Sen's paradox, but Ikiesling also links to Brad Delong's thoughts on Sen's paradox.

" Sen considered what [Vilfredo] Pareto might say of a world in which lived two agents, Lewd and Prude. Lewd wants to read porn, but finds the thought of Prude being forced to read Lady Chatterley's Lover even more exciting. Prude finds Lady Chatterley's Lover appalling, but is even more disturbed by the thought of Lewd reading it and enjoying it.

Freedom [Sen says] is not Pareto optimal in this case. [Freedom leads to Lewd reading Lady Chatterley's Lover and Prude not reading it. But it] is Pareto better[, that is, everyone is happier in a utilitarian sense,] to block Lewd from reading LCL and to force Prude to read it.

This is crazy. And, in any case, it shows that Liberalism and the [utilitarian] Pareto principal might hypothetically be in conflict.

It's at this point that my brain goes, "Booiiinnnggg!" The Liberal--libertarian--outcome is not for Lewd to eagerly read Lady Chatterley's Lover and for Prude to stand angrily by. The Liberal outcome is for Lewd to say, "I'll pay you $100 if you read this book," for Prude to accept (there is a bargain here that both would agree to at some price), and for Prude to then say "I'll pay you $150 if you don't read this book"..."

That is, Brad Delong asks why Sen's paradox is not resolved by side payments.

Sen's example is hypothetical and side payments are ruled out by hypothesis.

To consider side payments, I would imagine a whole lot of lewds and prudes. To the prudes, eliminating porn is a public good. To the lewds having prudes exposed is a public good. Prude1 wants prude2 prude3 etc to pay lewd1, lewd2 etc to not view porn, but would rather keep the cash himself.

I think that the coercive powers of the state are often needed to achieve Pareto efficiency when there are public goods. As far as I can tell, Sen's example for a large mixed population of prudes and lewds is one such case. That is, I think, the tension between liberalism and the Pareto principal remains if the implausible ban on side payments is replaced with the assumption of a large population.