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Fairness Versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice


  • Louis Kaplow
  • Steven Shavell


In Fairness versus Welfare, we advance the thesis that social policies should be assessed based entirely on their effects on individuals' well-being. This thesis implies that no independent weight should be accorded to notions of fairness (other than many purely distributive notions). We support our thesis in three ways: by demonstrating how notions of fairness perversely reduce welfare, indeed, sometimes everyone's well-being; by revealing numerous other deficiencies in the notions, including their lack of sound rationales; and by providing an account of notions of fairness that explains their intuitive appeal in a manner that reinforces the conclusion that they should not be treated as independent principles in policy assessment. In this essay, we discuss these three themes and comment on issues raised by Richard Craswell, Lewis Kornhauser, and Jeremy Waldron.

Suggested Citation

  • Louis Kaplow & Steven Shavell, 2003. "Fairness Versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice," NBER Working Papers 9622, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9622
    Note: LE PE

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    References listed on IDEAS

    1. Jeremy Waldron, 2003. "Locating Distribution," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 277-302, January.
    2. Kaplow, Louis & Shavell, Steven, 1994. "Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income," The Journal of Legal Studies, University of Chicago Press, vol. 23(2), pages 667-681, June.
    3. Richard Craswell, 2003. "Kaplow and Shavell on the Substance of Fairness," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 245-275, January.
    4. Kaplow, Louis & Shavell, Steven, 1999. "The Conflict between Notions of Fairness and the Pareto Principle," American Law and Economics Review, Oxford University Press, vol. 1(1-2), pages 63-77, Fall.
    5. Louis Kaplow & Steven Shavell, 2001. "Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 281-286, April.
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    Cited by:

    1. Antonides, Gerrit & Kroft, Maaike, 2005. "Fairness judgments in household decision making," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 902-913, December.
    2. Manuel Couret Branco, 2007. "Economics Against Human Rights," Economics Working Papers 02_2007, University of Évora, Department of Economics (Portugal).
    3. Sergey Belozyorov & Zhanna Pisarenko, 2015. "Pension Reforms in Countries with Developed and Transitional Economies," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 158-169.
    4. Mongin, Philippe, 2019. "Interview of Peter J. Hammond," The Warwick Economics Research Paper Series (TWERPS) 1190, University of Warwick, Department of Economics.
    5. Olivia D'Aoust & Olivier Sterck, 2016. "Who Benefits from Customary Justice? Rent-seeking, Bribery and Criminality in sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 25(3), pages 439-467.
    6. Jeffrey Wagner & Luiz Freitas, 2007. "Capturing moral economic context," Economics Bulletin, AccessEcon, vol. 4(14), pages 1-10.
    7. Manuel Couret Branco, 2006. "The Right to Work and the Political Economy of Human Rights," Economics Working Papers 08_2006, University of Évora, Department of Economics (Portugal).
    8. repec:ebl:ecbull:v:4:y:2007:i:14:p:1-10 is not listed on IDEAS
    9. Safarzyńska, Karolina, 2013. "Evolutionary-economic policies for sustainable consumption," Ecological Economics, Elsevier, vol. 90(C), pages 187-195.
    10. Mark White, 2004. "Preaching to the choir: A response to Kaplow and Shavell's Fairness Versus Welfare," Review of Political Economy, Taylor & Francis Journals, vol. 16(4), pages 507-515.
    11. Yi Li, 2019. "Apportioning indivisible damage and strategic diffusion of pollution abatement technology," Journal of Economics, Springer, vol. 126(1), pages 19-42, January.

    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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