The hypothetical compensation criterion, developed by Hicks (1939) and Kaldor (1939), preserves the ordinal preference-satisfaction foundation of Pareto while dramatically expanding its policy applicability.

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Hicks (1939) and Kaldor (1939)(as historical references to economists): John Hicks and Nicolas Kaldor were 20th-century economists who independently developed this idea in 1939 as a way to evaluate whether economic policies make society better off overall.
Hypothetical compensation criterion(as used in economics and policy evaluation): A rule for deciding if a policy is good by asking: could the people who benefit from it theoretically pay back the people who are hurt by it and still come out ahead? If yes, the policy passes the test.
Ordinal preference-satisfaction(as used in economic evaluation): A way of measuring whether people are happy based on their ranked choices (like: I prefer A over B over C) rather than trying to measure happiness with exact numbers.
Pareto(as used in economics and social choice theory): Vilfredo Pareto, an economist who developed the concept of 'Pareto efficiency'—a situation where you can't make someone better off without making someone else worse off.

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