IDEAS home Printed from https://ideas.repec.org/p/hal/cesptp/halshs-01441070.html
   My bibliography  Save this paper

Fair Utilitarianism

Author

Listed:
  • Marc Fleurbaey

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Stéphane Zuber

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Utilitarianism plays a central role in economics, but there is a gap between theory, where it is dominant, and applications, where monetary criteria are often used. For applications, a key di culty for utilitarianism remains to de ne how utilities should be measured and compared across individuals. Drawing on Harsanyi's approach (Harsanyi, 1955) involving choices in risky situations, we introduce a new normalization of utilities that is the only one ensuring that: 1) a transfer from a rich to a poor is welfare enhancing, and 2) populations with more risk averse people have lower welfare. We embed these requirements in a new characterization of utilitarianism and study some implications of this "fair utilitarianism" for risk sharing, collective risk aversion and the design of health policy.

Suggested Citation

  • Marc Fleurbaey & Stéphane Zuber, 2021. "Fair Utilitarianism," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01441070, HAL.
  • Handle: RePEc:hal:cesptp:halshs-01441070
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01441070v3
    as

    Download full text from publisher

    File URL: https://halshs.archives-ouvertes.fr/halshs-01441070v3/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fleurbaey,Marc & Maniquet,François, 2011. "A Theory of Fairness and Social Welfare," Cambridge Books, Cambridge University Press, number 9780521715348, December.
    2. Sam Schulhofer-Wohl, 2011. "Heterogeneity and Tests of Risk Sharing," Journal of Political Economy, University of Chicago Press, vol. 119(5), pages 925-958.
    3. Blackorby,Charles & Bossert,Walter & Donaldson,David J., 2005. "Population Issues in Social Choice Theory, Welfare Economics, and Ethics," Cambridge Books, Cambridge University Press, number 9780521532587, December.
    4. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    5. repec:hrv:faseco:34310083 is not listed on IDEAS
    6. Yves Sprumont, 2013. "On relative egalitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(4), pages 1015-1032, April.
    7. N Gregory Mankiw, 2010. "Spreading the Wealth Around: Reflections Inspired by Joe the Plumber," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 36(3), pages 285-298.
    8. Hara, Chiaki & Huang, James & Kuzmics, Christoph, 2007. "Representative consumer's risk aversion and efficient risk-sharing rules," Journal of Economic Theory, Elsevier, vol. 137(1), pages 652-672, November.
    9. Fossen, Frank M. & Glocker, Daniela, 2017. "Stated and revealed heterogeneous risk preferences in educational choice," European Economic Review, Elsevier, vol. 97(C), pages 1-25.
    10. Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-374, June.
    11. Fleurbaey, Marc & Blanchet, Didier, 2013. "Beyond GDP: Measuring Welfare and Assessing Sustainability," OUP Catalogue, Oxford University Press, number 9780199767199.
    12. Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
    13. Decker, Simon & Schmitz, Hendrik, 2016. "Health shocks and risk aversion," Journal of Health Economics, Elsevier, vol. 50(C), pages 156-170.
    14. Elyès Jouini & Clotilde Napp & Diego Nocetti, 2013. "Collective risk aversion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(2), pages 411-437, February.
    15. Uzi Segal, 2000. "Let's Agree That All Dictatorships Are Equally Bad," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 569-589, June.
    16. Fleurbaey, Marc & Zuber, Stéphane, 2017. "Fair management of social risk," Journal of Economic Theory, Elsevier, vol. 169(C), pages 666-706.
    17. Segal, U., 1996. "Let's Agree that All Dictatorships Are Equally Bad," UWO Department of Economics Working Papers 9611, University of Western Ontario, Department of Economics.
    18. Paolo Giovanni Piacquadio, 2017. "A Fairness Justification of Utilitarianism," Econometrica, Econometric Society, vol. 85, pages 1261-1276, July.
    19. Boadway, Robin, 2012. "From Optimal Tax Theory to Tax Policy: Retrospective and Prospective Views," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262017113, December.
    20. Martha C. Nussbaum, 2008. "Who Is the Happy Warrior? Philosophy Poses Questions to Psychology," The Journal of Legal Studies, University of Chicago Press, vol. 37(S2), pages 81-113, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Piacquadio, Paolo G., 2020. "The ethics of intergenerational risk," Journal of Economic Theory, Elsevier, vol. 186(C).
    2. Koen Decancq & Erik Schokkaert, 2016. "Beyond GDP: Using Equivalent Incomes to Measure Well-Being in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 21-55, March.
    3. Koen Decancq & Marc Fleurbaey & Erik Schokkaert, 2015. "Happiness, Equivalent Incomes and Respect for Individual Preferences," Economica, London School of Economics and Political Science, vol. 82, pages 1082-1106, December.
    4. Marie-Louise Leroux & Pierre Pestieau & Grégory Ponthière, 2019. "Childlessness, Childfreeness and Compensation," Working Papers halshs-02400049, HAL.
    5. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2018. "Who's afraid of aggregating money metrics?," Theoretical Economics, Econometric Society, vol. 13(2), May.
    6. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," LIDAM Discussion Papers CORE 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Al-Najjar, Nabil I. & Pomatto, Luciano, 2020. "Aggregate risk and the Pareto principle," Journal of Economic Theory, Elsevier, vol. 189(C).
    8. Yves Sprumont, 2013. "On relative egalitarianism," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(4), pages 1015-1032, April.
    9. DECANCQ, Koen & NEUMANN, Dirk, 2014. "Does the choice of well-being measure matter empirically? An illustration with German data," LIDAM Discussion Papers CORE 2014050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. Koen Decancq & Erik Schokkaert, 2016. "Beyond GDP: Using Equivalent Incomes to Measure Well-Being in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 21-55, March.
    11. Yves Sprumont, 2020. "Nash welfarism and the distributive implications of informational constraints," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 49-64, April.
    12. Richard Cookson & Ieva Skarda & Owen Cotton‐Barratt & Matthew Adler & Miqdad Asaria & Toby Ord, 2021. "Quality adjusted life years based on health and consumption: A summary wellbeing measure for cross‐sectoral economic evaluation," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 70-85, January.
    13. McCarthy, David & Mikkola, Kalle & Thomas, Teruji, 2020. "Utilitarianism with and without expected utility," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 77-113.
    14. Thierry Marchant, 2019. "Utilitarianism without individual utilities," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(1), pages 1-19, June.
    15. Marc Fleurbaey, 2018. "Welfare economics, risk and uncertainty," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(1), pages 5-40, February.
    16. Omer F. Baris, 2018. "Timing effect in bargaining and ex ante efficiency of the relative utilitarian solution," Theory and Decision, Springer, vol. 84(4), pages 547-556, June.
    17. François Maniquet, 2017. "De chacun selon ses capacités à chacun selon ses besoins, ou (même) plus, s’il le souhaite," Revue économique, Presses de Sciences-Po, vol. 68(1), pages 119-129.
    18. Maitreesh Ghatak & François Maniquet, 2019. "Universal Basic Income: Some Theoretical Aspects," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 895-928, August.
    19. Adler, Matthew D. & Ferranna, Maddalena & Hammitt, James K. & Treich, Nicolas, 2021. "Fair innings? The utilitarian and prioritarian value of risk reduction over a whole lifetime," Journal of Health Economics, Elsevier, vol. 75(C).
    20. Marc Fleurbaey & Rossi Abi-Rafeh, 2016. "The Use of Distributional Weights in Benefit–Cost Analysis: Insights from Welfare Economics," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 10(2), pages 286-307.

    More about this item

    Keywords

    utilitarianism; social risk; Fairness;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:halshs-01441070. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://hal.archives-ouvertes.fr/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.