In welfare economics, a social planner is a decision-maker who attempts to achieve the best result for all parties involved. In neo-classical welfare economics, this means the maximization of a social welfare function. In modern welfare economics, there is more of an emphasis on Pareto optimality, in which no one's outcome can be improved without worsening someone else's outcome. Pareto-optimal solutions are not unique, and according to the Second Fundamental Theorem of Welfare Economics, a social planner can achieve any Pareto-optimal outcome by an appropriate redistribution of wealth.
In practice, the social planner role is generally played by a government. It should be noted, however, that real governments have incentives other than the benefit of their people. This problem is studied in public choice economics.
Though it is generally agreed that economic efficiency and social welfare will be substantially higher once a market system of allocation is in place, the transition has been slow, far slower than observers expected at the outset on the basis of the technical constraints.
In an economy composed of a number of identical individuals, the choice problem of a socialplanner maximizing the utility of a representative individual would be identical, and the same techniques may be used to solve for the consumption sequence that maximizes social welfare.
Alternatively, one may think of a "decentralized" problem, in which the planner does not choose quantities directly; instead, the optimal allocation is achieved via a price system, in which individuals choose their desired levels of consumption and saving on the basis of market prices.
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