Marshall's alternative definition of consumer surplus

Largely because of the objections that various economists had raised to the use of consumer surplus and Marshall's own apparent disenchantment with it as nothing more than a pedagogic device for introducing marginal analysis, interest in the concept remained dormant for most of the early twentieth century. This state of affairs changed dramatically in 1941 following the publication of J.R. Hicks's classic article “The Rehabilitation of Consumers' Surplus.” This immediately generated considerable debate among economists as they attempted to understand the full implications of what Hicks was saying. Significant objections were again raised, particularly by Samuelson (1942) and Little (1960), with the result that interest in the subject among theoretical economists appeared to wane during the 1960s. Paradoxically, however, at this same time the concept of consumer surplus became one of the foundation stones of cost–benefit analysis. For this reason it is particularly important that we examine fully the thrust of Hicks's arguments.

Hicks's starting point was clearly the Marshallian definition as given in Section 4.4: “the excess of the price which he would be willing to pay rather than go without the thing, over that which he actually does pay” (Marshall, 1920, p. 124).