Well-being measurement and fairness · Subjective well-being 1. Hedonic: emotions, feelings 2....
Transcript of Well-being measurement and fairness · Subjective well-being 1. Hedonic: emotions, feelings 2....
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Well-being measurement and fairness
Marc Fleurbaey
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Outline
• Subjective well-being • Opportunities • Equivalence approach • Examples
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Well-being measurement: for what purpose?
• Health evaluation – Physical and mental well-being
• Living standards – Economic affluence
• Social welfare/justice evaluation – Advantage
• The measure of well-being is not a given that
serves as an input to social evaluation, it is part of it: different principles of justice require different measures
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Subjective well-being
1. Hedonic: emotions, feelings 2. Evaluative: satisfaction, eudaimonia
• Hedonic:
– Good measure of advantage for hedonism (a perfectionist approach)
– A relevant component of advantage for other approaches
– A proxy of broader advantage?
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Subjective well-being
1. Hedonic: emotions, feelings 2. Evaluative: satisfaction, eudaimonia
• Evaluative:
– Not comparable when people use the scales differently
– A source of information about values and preferences?
– A good proxy for a broad measure of advantage? The “paradox of happiness”
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Source: Decancq and Neumann, Oxford Hdbook of WB and Public Policy
Subjective well-being and income as outliers
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Opportunities • Post-Rawlsian philosophy: personal responsibility,
opportunities, capabilities • Theoretical schools:
– Utilitarian vs libertarian over the consequences of responsibility
– Responsibility sphere: control vs preferences • Empirical schools:
– Disparity among circumstance groups (=inequality in average outcomes)
– Hypothetical outcome (replace responsibility variable with reference value)
– Multidimensional poverty
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Responsibility is suspect but necessary
• The free will problem: social science based on metaphysics? – The disparity approach gives lower bounds – The hypothetical-outcome approach assumes
responsibility for specific variables • False positives: it is tough to be an undeserving
poor • But responsibility follows from freedom, respect
for values & preferences – Replace the undeserving poor by the committed
frugal
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Fairness as respect for values & preferences
Indifference curves
is better off than
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Fairness as respect for values & preferences
Indifference curves
is better off than
even if different individuals
Same-preference principle
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Same-pref principle not satisfied by subjective well-being
Indifference curves
is better off than
even if different individuals 6
5
Same-preference principle
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Same-pref principle not satisfied by opportunity approach
• Disparity approach: personal outcome replaced with average outcome in the circumstance group
• Hypothetical-outcome approach: personal outcome replaced with hypothetical outcome
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Fairness as respect for values & preferences
• Theorem: A measure of well-being 𝑤𝑤 𝑥𝑥,𝑅𝑅 satisfies the “same-preference” principle iff 𝑤𝑤 𝑥𝑥,𝑅𝑅 is a representation of 𝑅𝑅 for every 𝑅𝑅.
• Comment: Anonymity brings interpersonal comparisons
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Fairness as respect for values & preferences
Indifference curves
is better off than
even if different PREFERENCES
Nested-contour principle
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Fairness as respect for values & preferences
• Theorem: A measure of well-being 𝑤𝑤 𝑥𝑥,𝑅𝑅 satisfies the “nested-contour” principle iff it is an increasing function of indifference curves.
• Comments: – Are these principles compelling? Only if all relevant
dimensions of life are recorded – Is there a wedge between the same-preference principle
and the nested-contour principle? The latter follows from the former under “independence of irrelevant indifference curves”
– Are there measures that satisfy these principles? • Not subjective well-being • Not opportunities
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Equivalence approach
Indifference curves
Compare people by their equivalent
bundles on a reference path
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Equivalence approach
Indifference curves
On the path, preferences
are irrelevant
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Equivalence approach
Indifference curves
A dominating bundle is not necessarily
better, it depends on preferences
Theorem: No approach satisfies Same-Preference principle and Dominance principle
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Equivalence approach
Indifference curves
The reference path can be a collection of nested sets
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Equivalence approach
Indifference curves
A combination of equivalence indexes
still satisfies the Nested-Contour
principle
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Area approach
Indifference curves
The area below indifference curves
is the sum of equivalence indexes
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How to choose the reference(s)?
• One reference: – Locus of interpersonal comparisons that do not
depend on preferences – “Normal” path (e.g., good health) – Average path of development: this minimizes the
dependence on preferences • Several references:
– Then all interpersonal comparisons depend on preferences
– Can there be several normal paths? – Central paths of development: can be combined with
the area approach
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Equivalence/area approach
Indifference curves
Area approach restricted to a particular zone
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Other fairness principles
• Dominance (of bundles) restricted to a particular zone
• Theorem: The single-path equivalence approach is characterized by the Same-Preference principle and the Dominance principle restricted to a zone (and the zone must be a single path)
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Equivalence approach characterized
Indifference curves
Compare people by their equivalent
bundles on a reference path
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Equivalence approach characterized
With a larger zone, one can construct
cycles
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Other fairness principles
• Dominance (of bundles) restricted to a particular zone
• Theorem: The single-path equivalence approach is characterized by the Same-Preference principle and the Dominance principle restricted to a zone (and the zone must be a single path)
• This shows that the equivalence approach is compatible with an “objective” type of comparisons (i.e., made in the space of bundles)
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Other fairness principles
Indifference curves
is not better than and
Supremum nested-contour
principle
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Other fairness principles
Indifference curves
Theorem: Supremum nested-contour is equivalent to an equivalence approach with reference sets from below
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Other fairness principles
• Do people deserve their market earning potential (wage rates, for ordinary workers)?
• Does work aversion deserve favorable treatment? (e.g., because of care burden)
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Consumption-work setting
labor
consumption
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Equivalent budget of the 1st-best type
labor
consumption
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Choice of equivalent budget slope
labor
consumption
Same slope for all: personal wage rate is
irrelevant
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Choice of equivalent budget slope
labor
consumption
Flatter slope: more favorable to work-averse
preferences
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Choice of equivalent budget slope
labor
consumption Personal slope based on market wage rate: makes
it possible to reward or punish
the more productive
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Reward the more productive
labor
consumption Personal slope based on market wage rate: makes
it possible to reward or punish
the more productive
The lower the reference labor for budget comparisons, the more productive people are rewarded
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Reward the more productive
labor
consumption
The lower the reference labor for budget comparisons, the more productive people are rewarded
In the extreme,
one obtains the libertarian approach
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Punish the more productive
labor
consumption
The lower the reference labor for budget comparisons, the more productive people are rewarded
In the other
extreme, one
obtains the slavery of
the talented
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Illustration: optimal income tax in the USA (maximin)
Same slope for all, at 3 levels: 0,
minimum wage, 2xminimum wage
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Illustration: optimal income tax in the USA (maximin)
Slope = personal market wage rate, with 4
reference labor values: 0, 20%,
50%, 100% of full time
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Actual US tax
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Conclusion
• Fairness conditions help select well-being measures: – Same-preference principle excludes SWB and
opportunity – Add Dominance principle over a zone ->
equivalence approach – Market earning potential, work aversion ->
particular equivalent budgets
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References and further readings • Decancq, Neumann, “Does the choice of well-being measure matter
empirically?” in Oxford Handbook of Well-Being and Public Policy, 2016
• Decancq, Fleurbaey, Schokkaert, "Inequality, income, and well-being", in Handbook of Income Distribution 2A, Elsevier, 2015
• Fleurbaey, "Equal opportunity, reward, and respect for preferences: Reply to Roemer", Economics and Philosophy 28: 201-216, 2012
• Fleurbaey, Blanchet, Beyond GDP, Oxford UP, 2013 • Fleurbaey Maniquet "Fairness and well-being measurement"
Mathematical Social Sciences 90: 119-126, 2017 • --- "Optimal income taxation theory and principles of fairness",
Journal of Economic Literature 56 (3): 1029-79, 2018