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Interpersonal Comparisons of Well-Being
Abstract
This paper, which is to be published as a chapter in the Oxford Handbook of Political Economy, provides an introduction to social-choice theory with interpersonal comparisons of well-being. We argue that the most promising route of escape from the negative conclusion of Arrow's theorem is to use a richer informational environment than ordinal measurability and the absence of interpersonal comparability of well-being. We discuss welfarist social evaluation (which requires that the levels of individual well-being in two alternatives are the only determinants of their social ranking) and present characterizations of some important social-evaluation orderings.
... Comme préciser par Ravallion (1995) :"les méthodes de détermination des seuils de pauvreté utilisées en pratique sont rarement formulées en des termes manifestement utilitaristes" 24 . Nous verrons dans le paragraphe traitant les seuils relatifs comment une approche utilitariste donne lieu à un seuil monétaire déduit à partir d'un seuil d'utilité de référence. ...
... Ceci nous ramène à la seconde méthode du seuil absolu que nous allons présenter dans le paragraphe qui suit. 24 Ravallion (1995, page 33) Encadré 1 : Les quatre approches de la pauvreté Les mesures de la pauvreté Quatre approches sont utilisées : La première cerne la pauvreté monétaire « relative ». Sont pauvres les personnes et les ménages dont les revenus sont inférieurs à un seuil monétaire relatif, fixé en fonction de la distribution des revenus. ...
... On note que les fonctions d'utilité sont considérées comme indicateurs de Bien-être individuels, voirBlackorby et Bossert (2004) ...
L'approche par les capabilites se sen est venue rendre a l'economique son ethique, en mettant l'accent sur les valeurs reelles d'une vie humaine digne. l'enjeu de la these consiste a etudier l'apport de cette approche concernant deux point essentiels : la redefinition du developpement en terme de capabilites. il s'agit de reconsiderer le processus du developpement comme etant un processus d'expansion des libertes reelles dont jouissent les individus. une base theorique d'etude de la pauvrete multidimensionnelle. dans cette logique, l'espace des capabilites - defini comme l'ensemble des combinaisons d'actions et de choix individuels - est juge plus approprie pour definir la pauvrete. sur ce point, nous analyserons, a partir de donnees francaises fournies par le dispositifs epcv, les privations en France.
... Also, current welfarism often distinguishes welfare from preference. For instance, Blackorby and Bossert (2004) write: "Individuals [...] may have self-regarding preferences that accord with their well-being [i.e. welfare], but we do not assume that they do. ...
In a single framework, I address the question of the informational basis for evaluating social states. I particularly focus on information about individual welfare, individual preferences and individual (moral) judgments, but the model is also open to any other informational input deemed relevant, e.g. sources of welfare and motivations behind preferences. In addition to proving some possibility and impossibility results, I discuss objections against using information about only one aspect (e.g. using only preference information). These objections suggest a multi-aspect informational basis for aggregation. However, the multi-aspect approach faces an impossibility result created by a lack of inter-aspect comparability. The impossibility could be overcome by measuring information on non-cardinal scales.
Kenneth J. Arrow was one of the most important intellectuals of the twentieth century, and his “impossibility theorem” is arguably the starting point of modern, axiomatic social choice theory. In this review, we begin with a brief discussion of Arrow's theorem and subsequent work that extended the result. We then discuss its implications for voting and constitutional systems, including a number of seminal results—both positive and negative—that characterize what such systems can accomplish and why. We then depart from this narrow interpretation of the result to consider more varied institutional design questions such as apportionment and geographical districting. Following this, we address the theorem's implications for measurement of concepts of fundamental interest to political science such as justice and inequality. Finally, we address current work applying social choice concepts and the axiomatic method to data analysis more generally.
We study the problem of resolving conflicting discount rates via a social choice approach. We introduce several axioms, seeking to capture the tension between allowing for intergenerational comparisons of utility, and imposing intergenerational fairness. Depending on which axioms are judged appropriate, we are led to one of several conclusions: a utilitarian, maxmin, or a multi‐utilitarian rule, whereby a utility stream is judged by the worst in a set of utilitarian weighting schemes across discount rates.
A focus on the ,information used in Bentham’s felicific calculus sheds,new ,light on the ,contemporary ,debate ,in normative economics,opposing ,non-welfarism ,to welfarism. ,As a utilitarian, Bentham is de facto welfarist on a moral sense. Unexpectedly, this study shows Bentham resorts to non- welfarist information in his calculus. Thus, technical non- welfarism is coherent with moral welfarism, and even, the former proves necessary,not to betray utilitarian principles. To sustain this claim, we challenge a view opposing a “cardinal” toan,“ordinal” calculus: these two calculi constitute different stages of a unique calculus; because of operational constraints, Bentham is bound to rely on proxies, hence on non-utility information. Key words: Bentham, individual utility, utility calculus, utilitarianism, welfarism, non-welfarism, social welfare, technical welfarism, moral welfarism. JEL codes: B12, B31, D63. A step back to Bentham
Zusammenfassung In der vorliegenden Studie werden Bestimmungsfaktoren von Lebenszufriedenheit untersucht. Mit eigens in München erhobenen Daten werden neben der deskriptiven Darstellung der gegenwärtigen Lebenszufriedenheit der Münchener Bevölkerung die Wirkungen körperlicher, sozialer sowie materi-eller Einflussfaktoren auf das persönliche Wohlbefinden analysiert. Es zeigt sich, dass trotz des subjektiven Charakters von empfundenem Glück die Lebenszufriedenheit der Münchener Bevölkerung zu rund 20 % mit Hilfe genereller Einflussfaktoren erklärt werden kann. Neben dem Lebensalter besitzen dabei insbesondere soziale Einflussfaktoren eine hohe Relevanz.
We propose a mathematical model of `approximate' interpersonal comparisons of well-being, in terms of an incomplete preorder over a space of `psychophysical states'. We argue that this model is consistent with people's intuitions about interpersonal comparisons, intertemporal preferences, and changes in psychological identity over time. We then construct several simple mathematical models to illustrate the versatility of this approach.
We develop a model of social choice over lotteries, where people's psychological characteristics are mutable, their preferences may be incomplete, and approximate interpersonal comparisons of well-being are possible. Formally, we suppose individual preferences are described by a von~Neumann-Morgenstern (vNM) preference order on a space of lotteries over psychophysical states; the social planner must construct a vNM preference order on lotteries over social states. First we consider a model when the individual vNM preference order is incomplete (so not all interpersonal comparisons are possible). Then we consider a model where the individual vNM preference order is complete, but unknown to the planner, and thus modeled by a random variable. In both cases, we obtain characterizations of a utilitarian social welfare function.
Proefschrift : Beleidswetenschapp. : Universiteit Nijmegen, 1999. Bibliogr.: p. 295-304.
The ability of agent-based models (ABMs) to represent heterogeneity in the characteristics and behaviors of actors enables analyses about the implications of this heterogeneity for system behavior. The importance of heterogeneity in the specification of ABMs, however, creates new demands for empirical support. An earlier analysis of a survey of residential preferences within southeastern Michigan revealed seven groups of residents with similar preferences on similar characteristics of location. In this paper, we present an ABM that represents the process of residential development within an urban system and run it for a hypothetical pattern of environmental variation. Residential locations are selected by residential agents, who evaluate locations on the basis of preference for nearness to urban services, including jobs, aesthetic quality of the landscape, and their similarity to their neighbors. We populate our ABM with a population of residential preferences drawn from the survey results in five different ways: (1) preferences drawn at random; (2) equal preferences based on the mean from the entire survey sample; (3) preferences drawn from a single distribution, whose mean and standard deviation are derived from the survey sample; (4) equal preferences within each of seven groups, based on the group means; and (5) preferences drawn from distributions for each of seven groups, defined by group means and standard deviations. Model sensitivity analysis, based on multiple runs of our model under each case, revealed that adding heterogeneity to agents has a significant effect on model outcomes, measured by aggregate patterns of development sprawl and clustering.
While economic methodologists seem to be increasingly dissatisfied with Lakatos's criteria of appraisal, many (internalist) historians of economic thought continue to rely on typically Lakatosian categories in order to identify portions of economic analysis whose historical development is to be 'rationally' reconstructed. This historiographic approach, however, prevents economists from realizing that Lakatosian novel facts may be 'new' not only because previously unknown, but even because previously inexistent. To deny this possibility is tantamount to believing in an incredibly strong version. of methodological monism according to which social sciences deal with a subject-matter as immutable over time as that of natural science.
Extensions of a utilitarian and a Suppes–Sen grading principle defined on infinite utility streams are characterized with a stronger notion of Anonymity and without any consistency postulate. The relative merits of the Extended Utilitarian relation are discussed and its rankings are compared with those of the overtaking criterion and the Basu–Mitra Utilitarian relation.
The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration.
This book presents an exploration of the idea of the common or social good, extended so that alternatives with different populations can be ranked. The approach is, in the main, welfarist, basing rankings on the well-being, broadly conceived, of those who are alive (or ever lived). The axiomatic method is employed, and topics investigated include: the measurement of individual well-being, social attitudes toward inequality of well-being, the main classes of population principles, principles that provide incomplete rankings, principles that rank uncertain alternatives, best choices from feasible sets, and applications. The chapters are divided, with mathematical arguments confined to the second part. The first part is intended to make the arguments accessible to a more general readership. Although the book can be read as a defense of the critical-level generalized-utilitarian class of principles, comprehensive examinations of other classes are included.
Harsanyi's Aggregation Theorem states that if the individuals' as well as the moral observer's utility functions are von Neumann-Morgenstern, and a Pareto condition holds, then the latter function is affine in terms of the former. Sen and others have objected to Harsanyi's use of this result as an argument for utilitarianism. The present article proves an analogue of the Aggregation Theorem within the multi-profile formalism of social welfare functionals. This restatement and two closely related results provide a framework in which the theorem can be compared with well-known characterisations of utilitarianism, and its ethical significance can be better appreciated. While several interpretative questions remain unsettled, it is argued that at least one major objection among those raised by Sen has been answered.
This chapter provides a survey of utilitarian theories of justice. We review and discuss axiomatizations of utilitarian and generalized-utilitarian social-evaluation functionals in a welfarist framework. Section 2 introduces, along with some basic definitions, social-evaluation functionals. Furthermore, we discuss several information-invariance assumptions. In Section 3, we introduce the welfarism axioms unrestricted domain, binary independence of irrelevant alternatives and Pareto indifference, and use them to characterize welfarist social evaluation. These axioms imply that there exists a single ordering of utility vectors that can be used to rank all alternatives for any profile of individual utility functions. We call such an ordering a social-evaluation ordering, and we introduce several examples of classes of such orderings. In addition, we formulate some further basic axioms. Section 4 provides characterizations of generalized-utilitarian social-evaluation orderings, both in a static and in an intertemporal framework. Section 5 deals with the special case of utilitarianism. We review some known axiomatizations and, in addition, prove a new characterization result that uses an axiom we call incremental equity. In Section 6, we analyze generalizations of utilitarian principles to variable-population environments. We extend the welfarism theorem to a variable-population framework and provide a characterization of critical-level generalized utilitarianism. Section 7 provides an extension to situations in which the alternatives resulting from choices among feasible actions are not known with certainty. In this setting, we discuss characterization as well as impossibility results. Section 8 concludes.
This paper, which is to be published as a chapter in the Handbook of Social Choice and Welfare, provides a survey of Utilitarianism as a theory of justice. We review and discuss axiomatizations of Utilitarian and Generalized-Utilitarian social-evaluation functionals in a welfarist framework. In addition, we analyze extensions of Utilitarian principles to variable-population environments and to situations in which the alternatives resulting from choices among feasible actions are not known with certainty.
This paper characterizes welfarist social evaluation in a multi-profile setting where, in addition to multiple utility profiles, there may be more than one profile of non-welfare information. We prove a new version of the welfarism theorem in this alternative framework, and we demonstrate that adding a plausible and weak anonymity property to the welfarism axioms generates welfarist social-evaluation orderings that are anonymous.
This paper provides new versions of Harsanyi’s social aggregation theorem that are formulated in terms of prospects rather than lotteries. Strengthening an earlier result, fixed-population ex-ante utilitarianism is characterized in a multi-profile setting with fixed probabilities. In addition, we extend the social aggregation theorem to social-evaluation problems under uncertainty with a variable population and generalize our approach to uncertain alternatives, which consist of compound vectors of probability distributions and prospects.
John Harsanyi’s (1955) classic article on social choice when individual and social preferences satisfy the expected utility hypothesis is one of the most widely read and discussed contributions to social choice theory. This article introduced Harsanyi’s Social Aggregation Theorem. In this theorem, individual and social preferences are defined on the set of lotteries generated from a finite set of basic prospects. These preferences are assumed to satisfy the expected utility hypothesis and are represented by von Neumann — Morgen- stern (1947) utility functions. The only link between the individual and social preferences is the requirement that society should be indifferent between a pair of lotteries when all individuals are indifferent between them. This condition is known as Pareto Indifference. With these assumptions, Harsanyi concluded that the social utility function must be an affine combination of the individual utility functions; i.e., social utility is a weighted sum of individual utilities once the origin of the social utility function is suitably normalized. This affine relationship between the individual and social utility functions is Harsanyi’s Aggregation Equation.
The problem of aggregating individual preference orderings to form a social ordering took a new turn when Arrow organized the subject abstractly. We study here his celebrated theorem that five plausible conditions on the method of aggregation are inconsistent. This theorem is in fact false in general, as a counter-example shows. When we increase the amount of disagreement which is allowed to occur, then the inconsistency is restored. The modified result preserves much of the impact of the original theorem.
Weak Pareto versions of Harsanyi's Social Aggregation Theorem are established for mixture-preserving utility functions defined on a mixture set of alternatives.
Many applications of economic analysis require social evaluations of alternatives involving different numbers of people. In this paper we use the tools of social-choice theory to provide an axiomatic formulation of this problem. It yields a class of social criteria called ‘critical-level generalized utilitarianism’. This class and its implications are compared with other criteria and are found to yield intuitively appealing results.
A version of Harsanyi's social aggregation theorem is established for state-contingent alternatives when the number of states is finite. The consequences of using utility functions that do not have an expected utility functional form to represent the individual and social preferences are also considered.
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Sen's social-evaluation-functional framework is used to reformulate harsanyi's social aggregation problem so that both single-profile and multi-profile issues can be considered with allowance made for different assumption concerning the measurability and comparability of individual utilities. Uncertainty is modelled using state contingent alternatives with fixed state probabilities. Individual utility functions and social preferences are required to satisfy the expected utility hypothesis. On various domains, we investigate the extent to which the expected utility hypothesis can provide support for weighted utilitarism when the social aggregation procedure is Paretian.
Harsanyi's Social Aggregation Theorem is concerned with the aggregation of individual preferences defined on the set of lotteries generated from a finite set of basic prospects into a social preference. These preferences are assumed to satisfy the expected utility hypothesis and are represented by von Neumann-Morgenstern utility functions. Harsanyi's Theorem says that if Pareto Indifference is satisfied, then the social utility function must be an affine combination of the individual utility functions. This article considers the implications for Harsanyi's Theorem of replacing Pareto Indifference with Weak Pareto.
In this volume a diverse group of economists, philosophers, political scientists, and psychologists address the problems, principles, and practices involved in comparing the well-being of different individuals. A series of questions lie at the heart of this investigation: What is the relevant concept of well-being for the purposes of comparison? How could the comparisons be carried out for policy purposes? How are such comparisons made now? How do the difficulties involved in these comparisons affect the status of utilitarian theories? This collection constitutes the most advanced and comprehensive treatment of one of the cardinal issues in social theory.
In Arrovian [Arrow (1951, 1963)] social choice theory, the objective is to construct a social welfare function—a mapping which assigns a social preference ordering to each admissible profile of individual preferences—satisfying several a priori appealing conditions. Arrow showed that the only social welfare functions satisfying his axioms are dictatorial in the sense that there exists an individual whose strict preference over any two social alternatives is always replicated in the social ordering, no matter what the preferences of the remaining members of society happen to be. This negative result has initiated a series of contributions which attempt to avoid Arrow’s impossibility theorem by weakening one or more of his original axioms. The results in this literature are, on the whole, rather negative as well.
The naïve concept of social welfare as a sum of intuitively measurable and comparable individual cardinal utilities has been found unable to withstand the methodological criticism of the Pareto school. Professor Bergson2 has therefore recommended its replacement by the more general concept of. a social welfare function, defined as an arbitrary mathematical function of economic (and other social) variables, of a form freely chosen according to one’s personal ethical (or political) value judgments. Of course, in this terminology everybody will have a social welfare function of his own, different from that of everybody else except to the extent to which different individuals’ value judgments happen to coincide with one another. Actually, owing to the prevalence of individualistic value judgments in our society, it has been generally agreed that a social welfare function should be an increasing function of the utilities of individuals: if a certain situation, X, is preferred by an individual to another situation, y, and if none of the other individuals prefers Y to X, then X should be regarded as socially preferable to y. But no other restriction is to be imposed on the mathematical form of a social welfare function.
Two separate problems appear to be associated with attempts
to formulate voting processes or social welfare functions that incorporate
"intensity" of preference. The first is that of identifying
a measure for intensity of preference. The second problem is that
of incorporating the measure into a voting process. In this paper the
former problem is ignored. It is assumed that a measure of "relative
intensity" has been chosen and that this measure has the
properties of the positive real numbers.
This paper reviews the SWFL approach to social choice. It does not attempt to be a complete and systematic survey of existing results, but to give a critical assessment of the main axioms and their role in filtering the ethically relevant information, in particular the measurability and comparability properties of individual evaluation functions. Social welfare functionals are defined formally together with closely related concepts. After adducing a good number of examples, we elaborate on the meaning of the SWFL domain of definition and we sketch some alternative approaches. Several types of axioms are considered; some of them are used to filter the relevant information while others express collective efficiency or equity requirements. Then, to illustrate the various tradeoffs among these axioms, selected characterisation results are presented; most of them are cast in what we call the formally welfarist framework. Finally, we have assembled some other characterisations which eschew either invariance properties or the formally welfarist framework. We discuss the treatment of two sets of social alternatives endowed with an enriched structure, viz. the set of classical exchange economies and the complete set of lotteries one can define on an abstract set of pure alternatives. As an introduction to the latter discussion, we elaborate on the difficulties raised by social evaluation when risks and uncertainty are taken explicitly into account.
The principle that it is better to let some guilty individuals be set free than to mistakenly convict an innocent person is generally shared by legal scholars, judges and lawmakers of modern societies. The paper shows why this common trait of criminal procedure is also efficient. It extends the standard Polinsky and Shavell (2007) model of deterrence and shows that when the costs of convictions are positive, and guilty individuals are more likely to be convicted than innocent individuals it is always efficient to minimize the number of wrongful convictions, while a more than minimal amount of wrongful acquittals may be optimal.
Discussions of the morality of animal exploitation must deal with the fact that these activities result in animal populations that would not otherwise exist. In this paper, simple economic models of animal-using food production and research are combined with explicit ethical criteria that are sensitive to animal well-being and numbers. The authors show that when animal exploitation is morally acceptable, lack of regulation results in too many food animals and research that is too animal-intensive. In addition, nonmarket control--through "bills of rights" for farm animals and research-practice standards--is necessary for ethical optimality. Copyright 1992 by Royal Economic Society.
Suppose that social choice is based on interpersonal comparisons of welfare levels. Suppose too that, whenever all but two persons are indifferent between two options, a choice is made between these options which is equitable, in some sense. Then provided that individual welfare functions are unrestricted, and social choice is independent of irrelevant alternatives, it follows that social choice is always equitable, in the same sense. This applies when equity means satisfying Suppes' indifference rule, or Suppes' original justice criterion, or the lexicographic extension of Rawls' difference principle.
Two sets of orderings are characterized. In either case, these orderings are defined on the n-dimensional Euclidean space, interpreted as the utility space. Moreover, they all satisfy the strong Pareto principle, an anonymity axiom, and an axiom of interpersonal comparability of utility levels. In one case, interpersonal comparability of utility gains is also assumed.
Regularity conditions in social welfare analysis can be seen as ways of making specific types of information "inadmissible" in welfare judgements: the evaluation is made invariant with respect to information of those types. In this sense, these conditions--often reflecting "principles" of judgement--serve also as informational constraints. In this lecture alternative approaches to social welfare evaluation are examined in this light. The analysis covers both Arrovian and Bergson--Samualsonian social welfare functions as well as principles underlying utilitarianism, Rawlsian conception of justice, notions of liberty and egality, and "historical" theories of rights and entitlements (e.g., Marx or Nozick).
An Arrow social welfare function was designed not to incorporate any interpersonal comparisons. But some notions of equity rest on interpersonal comparisons. It is shown that a generalized social welfare function, incorporating interpersonal comparisons, can satisfy modifications of the Arrow conditions, and also a strong version of an equity axiom due to Sen. One such generalized social welfare function is the lexicographic form of Rawls' difference principle or maximin rule. This kind of generalized social welfare function is the only kind satisfying the modified Arrow conditions, the equity axiom, and a condition which underlies Suppes' grading principle.
The axiom translation invariance consists in asserting the invariance of the ranking of two utility streams if one applies the same translation to both. This axiom is significant in the characterization of utilitarian criteria in finite dimension. This characterization is achieved thanks to the "weak weighted utilitarianism theorem".The objective here is to propose a generalization of this theorem in a space of infinite and unbounded utility streams. A consequence of the suggested generalization is that, in the context of intergenerational choice, every maximal point with respect to a paretian utilitarian order granting comparable considerations to the present and the future, is also a maximal point with respect to some future-oriented criterion.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Utility and the good, in A Companion to Ethics
- R Goodin
Goodin, R., 1991, Utility and the good, in A Companion to Ethics, P. Singer, ed., Basil
Blackwell, Oxford, 241–248.
Axioms for social welfare orderings, in Social Goals and Social Organizations: Essays in Memory
- C Aspremont
d'Aspremont, C., 1985, Axioms for social welfare orderings, in Social Goals and Social
Organizations: Essays in Memory of Elisha Pazner, L. Hurwicz, D. Schmeidler and
H. Sonnenschein, eds., Cambridge University Press, Cambridge, 19–76.
Games against nature, in Decision Processes
- J Milnor
Milnor, J., 1954, Games against nature, in Decision Processes, R. Thrall, C. Coombs and
R. Davis, eds., Wiley, New York, 49–59.
Interpersonal comparisons and social welfare functions, unpublished manuscript
- A Dixit
Dixit, A., 1980, Interpersonal comparisons and social welfare functions, unpublished
manuscript, University of Warwick, Department of Economics.
Utility in social choice, in Handbook of Utility Theory
- W Bossert
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vol. 2: Extensions, S. Barberà, P. Hammond and C. Seidl, eds., Kluwer, Dordrecht,
1099–1177.
- A Sen
Sen, A., 1970, Collective Choice and Social Welfare, Holden-Day, San Francisco.