Carolin Ehrensperger
ECON4270 Distributive Justice
Autumn 2009
Utilitarianism and other welfarist approaches to distributive justice - an
exposition and critical discussion
Many different ideas exist about what should be distributed and how that should be
done to promote justice in our society.
One approach, called welfarism, considers the
distribution of welfare or utility among the citizens of a society. Welfarism can be subdivided
into utilitarianism and welfare economics. Whereas the former is a branch of philosophy
concerned with both the personal and the public sphere, the latter does not discuss the basic
structure of society but the distribution of income and wealth within a given framework and is
a tool for evaluation of policy decisions.
First of all a definition of welfare or utility is needed. Kymlicka discusses four
different conceptions of welfare. The first one sets utility equal to pleasure, pleasure being
the only good. This so called welfare hedonism is contrasted by the non-hedonistic mentalstate utility proposing that pleasure is not the only good but that non-pleasurable experiences
can also generate utility. One criticism applying to both of these concepts is Nozick’s
‘experience machine’. This machine could generate pleasure by drugging people and letting
them experience pleasurable or rewarding moments.
The other two approaches relate to the satisfaction of preferences. The third considers
the preferences people show in reality, what people expect to be best for them at the moment.
But what we prefer at one moment might not increase our well-being, for example not
studying might seem a good choice when the sun is shining but when applying for a job the
better choice might have been to study and receive better grades. The last approach tries to
resolve this problem by using informed preferences: preferences one would exhibit having
full information and acting rationally. This essay will discuss preference welfarism, but there
are many problems associated with this approach as well.
The questions of what rational behavior is and given what background informed
preferences should be formed have to be answered. Preferences depend on the present living
conditions: they are adaptive. At the beginning of the century women had probably very
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different preferences and expectations from women living today.
As preferences are the
basis of the standard of rightness in welfarism the resulting standard is prejudiced by the old
circumstances the preferences were influenced by.
Once the informed preferences and resulting utilities are found they have to be
compared and redistributed.
Preferences exhibit subjective feelings of individuals and
therefore some people argue they cannot be compared, in welfarism we assume utilities to be
interpersonally comparable. When differences in utility are computed, the welfare itself can
still neither be redistributed from one person to another nor can the government generate
welfare directly. The factors making individuals well-off have to be distributed. One might
have the wish for a family, but the government cannot make persons fall in love with one
another. Everything the government can do is to provide its citizens with the requirements
needed to satisfy these preferences, e.g. by securing the right to choose a partner freely.
Taking the cat from a cat lover and giving it to an allergic person would certainly not increase
that person’s welfare, because everyone has different preferences. To identify and satisfy the
numerous preferences a lot of information about each citizen is needed by the government;
besides the costs most people would see their rights violated by that.
The problems mentioned give rise to the use of proxies for the measurement of
individual welfare. Utility is derived from various factors like health, personal relationships,
liberties, income and wealth. In economics mainly the distribution of income and wealth is
used to compute welfare. This simplification certainly results in an incomplete analysis and
might even lead to biased outcomes if income and the neglected factors are correlated. To
evade the problem of getting the information about the subjective preferences of each
individual, the preferences of representative individuals are modeled.
The results are utility functions which plot the different income and/or wealth levels
against the utility of the person. One important assumption made normally is that a further
monetary unit gives you less additional pleasure the richer you are. This is called decreasing
marginal utility and seems plausible: when you live under the poverty line receiving one
monetary unit enables you to eat while an additional monetary unit being a millionaire cannot
buy you anything you do not already have. (Figure 4.1 Bojer)
Individual Utility Function: 𝑈𝑖 𝑌𝑖 ,
𝛿𝑢
𝛿𝑦
<0
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In welfarism the individual utilities are aggregated using social evaluation functions.
The utilitarian social evaluation function adds the individual utilities up to the total welfare of
society. To receive the average social welfare the total welfare is divided by the number of
citizens. The total and the average social welfare function yield equal results for questions
regarding the distribution among a given number of citizens. Concerning population policy
the first might suggest increasing the population if that increases total welfare, even if the
average citizen is worse off.
𝑛
Total social welfare:
W=
Average social welfare:
W=𝑛
𝑖=1
1
Ui ( Yi )
𝑛
𝑖=1 Ui
(Yi )
i=1,..., n
i=1,…, n
The social welfare, the value of either of these functions, is than maximized by
distributing the income. The first order conditions of the maximization problem imply that
the marginal utilities of all persons have to be equal; everyone should get the same amount of
additional utility from the last monetary unit. Assuming decreasing marginal utility, this
causes redistribution from the well off to the less well off. If everyone exhibits the same
preferences with decreasing marginal utility then utilitarianism leads to an equal distribution
of income. But if we assume marginal utility to be constant, a utilitarian is indifferent
between equal distribution and one person having all while the others have nothing. Hence
the utilitarian social welfare function is inequality-neutral, because the functions itself does
not imply redistribution.
Often social evaluation functions used in welfare economics are inequality-averse.
For example can the product of individual utilities be subject to maximization. The loss of
one person can then only incompletely be compensated by the gain of another, because the
individual utilities are not perfect substitutes as in the utilitarian social evaluation function.
One property of the utilitarian as well as of most social evaluation functions used by
economists is that the follow the Pareto Principle, meaning that an increase in the income of
one person, all other incomes remaining equal, raises social welfare. While this property
appears correct at the first sight, people might feel worse off if their neighbor earns more and
their income stays the same. Evidence for the ‘keeping up with the Joneses’ mentality has
been found in studies. (Figure 4.5 Bojer: Utilitarian and inequality-averse social evaluation
functions)
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In reality redistribution of income is limited because it distorts the incentives of people
to work. When high incomes are taxed to provide transfers to the less well off, people will
work less, because they can only keep a proportion of their income. Thus the amount of
money available for redistribution decreases. A trade-off between efficiency and equality
arises resulting in less redistribution and accordingly equality of income. The more uneven
the distribution of income to begin with and the stronger subjects react to taxation the worse
becomes this problem. (Figure 4.6 Bojer: unequal utilities because of trade-off for both the
utilitarian and the inequality-averse social evaluation function)
How the maximization is set up also implies some properties of utilitarianism. One of
the most important is that the preferences of every individual enter equally in the social
welfare function. In this way utilitarianism is an egalitarian theory, but we have to keep in
mind that depending on the preferences this does only in one case imply equal distribution of
wealth and welfare. As only the individual utilities enter in the function there is no common
good standing above the humans like god or the environment. The environment, animals or
even children do not enter directly in the problem; they can only indirectly be regarded if they
affect the utility of one or more humans. Nevertheless is it possible to change this property,
called humanism, by including animals or the environment directly. Also is welfarism a
consequentialist theory, only the results of actions, namely the changes in social welfare, are
examined and not the actions themselves. Another property is that welfarism respects the
preferences of every individual; this is also called consumer sovereignty.
This yields criticism not only because preferences are hard to measure, some
preferences are themselves raising problems. People might be envious or altruistic, which
would then lead to unequal weighing of the different preferences. Because altruists are
happier if others are also happy their preferences put more weight on the utility of others.
Envy on the other side decreases the welfare gain if the welfare of someone else is increasing
and thus takes weight from the other preferences. These interdependent preferences would in
a society with two similar subjects, besides one being envious and the other altruistic, give
more to the envious one, which does not comply with the intuition most people have.
Envy might be seen as an unethical preference, which turns the advantage of
welfarism that all preferences count equally, into a problem. Most would feel that unethical
preferences like envy or smoking and expansive preferences, for example if somebody only
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likes to wear brand clothes, should not be considered. On the other hand would most people
understand that a handicapped person has expensive preferences that should be respected.
Welfarism does not offer a tool to distinguish between the different reasons for
preferences.
This problem becomes even more obvious when contemplating unethical
preferences that affect others. Very few people would argue that preferences for sexual
harassment or child molestation should be accounted for equally or at all. If uninformed
preferences are regarded then child molestation that is not discovered leads to the disturbing
result of increasing the welfare of society.
The violation of the rights of the child does not by itself diminish social welfare
because there are no rights in welfarism, besides the right of everyone for his utility to enter
equally in the social evaluation function. Every action is merely assessed by a cost-benefit
analysis of its outcome in terms of welfare. This implies that there are no merits, because no
one has the right to keep the money he earns: no matter how much effort someone puts into
earning his money does not matter if someone else can make better use of it.
When
redistribution makes him work less he is to some degree allowed to keep more but only
because otherwise the total welfare would decrease not because he deserves more. Special
relationships like friendship, family or commitments themselves are also worthless, they are
only considered if enhancing someone’s welfare.
In welfare economics rights and moral obligations are exogenous and mostly the
effects of particular policies on representative groups of citizens are evaluated. In these cases
welfarism can be a good tool but one has to think carefully when modeling the preferences
and choosing the form of the social evaluation function. For this purpose data from the past
can be used. With welfarism as a method to design a whole society the story is different.
Neither rights nor merits are secured and only results evaluated. Hence the position of one
individual depends totally on the preferences of himself and his fellow citizens. Imagine a
society where the gains of men from not allowing women to study are bigger than the losses
of women, following welfarism women would not have the right to study. This result like
many others yielded by welfarism is the opposite of my intuition and hence welfarism cannot
be a reflective equilibrium for me.
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Literature:
- Bojer, H. (2002). Distributional Justice, Theory and Measurement, Routledge. Ch. 4
- Kymlicka, W. (2002). Contemporary Political Philosophy, Oxford University Press.
Ch. 2
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