Readings: Marc Fleurbaey, Fairness, Responsibility and Welfare, Selections from Ch. 3-5
1. Three Relaxed Conditions:
i. fixed and observable characteristics
ii. one-dimensional transferable resources (e.g. money)
iii. an increase in money always increases well-being
2. Relaxing (1)
-“It is not possible to know what level of well-being a particular individual will enjoy, but for the purpose of social evaluation, it is enough to know that individuals of a certain type end up in a certain situation. (74)”
-We find these situations, with “individuals of a certain type”, when we hold y or z as reference points counterfactually.
-Method and Explanation: Imagine a world C where everyone shares the same reference level of responsibility z*, then we equalize their utility u* in this world using the equation u*=xi+yiz*. (We equalize u* because z* is equal, i.e. they are all equally responsible.) Since we make these transfers in C, we will make them in the actual world, giving us the x’s and u’s. So every individual would be assumed to attain a certain base level of z, otherwise it is their fault. (This is why we set z* as a reference point for Conditional Equality.) A parallel to Dworkin’s insurance example is evident here, as we assume some base level of responsibility for individuals to buy insurance. There is a way in which you should buy it no matter who you are or what differences in responsibility you might otherwise have.
-Choosing a Reference Level: “The higher the reference level z*, the more redistribution there is toward those with low y. (reader’s guide)” and “[It] conforms to the liberal reward principle since xi is independent of zi. It does not conform to the compensation principle, but it does conform counterfactually. (reader's guide)” It fits the compensation principle only counterfactually because it is only in the imagined situation C where the principle is met.
-Method and Explanation: Imagine a world C with y*, then calculate the x’s and u’s of the actual world such that the u’s in C match the u’s in the actual world. This is done so that we can see how, after assuming a y*, x should be distributed if utility is purely a function of responsibility.
-Choosing a Reference Level: “The higher the reference level y*, the better for those with higher z*. (reader’s guide)” It is not a problem because people with higher z receive a benefit. That is justified in virtue of z being their responsibility. The problem is that they receive a disproportionately large benefit for a higher reference level y*, thus leaning towards pro-dedication. Furthermore, “[It] satisfies the compensation principle, because when zi=zj, then ui=uj. It satisfies the liberal reward principle counterfactually by providing equal hypothetical transfers in hypothetical equal circumstances. (reader’s guide)”
4. Information about the Population
i. observable circumstance=when y, but not z, is observable (e.g. a disability ascertainable by physicians)
ii. observable well-being=when only u is observable (e.g. income taxation)
-The Observable Circumstance Case:
-An Incentive Problem: The principal would be unable to know if individuals were misrepresenting their responsibility characteristics.
-Conditional equality is incentive-compatible because it assumes a reference level of responsibility. We do not need to know each individual’s responsibility characteristic. [Question #1]
-Egalitarian-equivalence is not incentive-compatible because it is sensitive to the individual’s responsibility characteristic.
-Allowing Individuals to Change Their Characteristics
i. Conditional equality and egalitarian-equivalence can only rank allocations for a given reference value. Because of this, a complication arises if the reference value relies on the distribution.
ii. the problem of “genuine choice”
-The Observable Well-being Case:
-To individuals of the same well-being, we must give the same treatment.
-This does not entail full equality of well-being.
1. Income Redistribution in Light of Different Circumstances (e.g. innate abilities or background) and Choices (e.g. preference for leisure time)
-Income Redistribution and The No-envy Test: People are not responsible for which consumption-leisure bundles are available but are responsible for their preferences (and thus which bundle they each choose given what is available). Since skills determine what bundles are available, people are thus not responsible for skills and such differences should be equalized.
-The Case of Ann and Barb: the impossibility of an envy-free and efficient redistribution
-Two Older Approaches
1. Wealth-fair allocation
2. Full-income-fair allocation
3. Incompatibility Revisited
-Equal Well-Being for Equal Utility: “Two individuals whose well-being depends on consumption and leisure in the same way should have the same level of well-being. (105)”
-Equal Treatment for Equal Skills: “Two individuals with identical skills should not suffer envy between themselves. (105)”
-The case of Ann, Barb, Chris, and Deb: another manifestation of the no-envy test’s inner conflict. Ann and Deb, Barb and Chris have identical utility functions, but Ann and Chris, Barb and Deb have identical skills.
5. Applying Conditional Equality to income redistribution
-What happens when we vary the reference preference (z*)?
-“A sobering result”: two problems for the majority of Conditional Equality solutions
6. Applying Egalitarian-Equivalence to income redistribution
-What happens when we vary the reference level for skills (y*)?
-Three versions of Egalitarian-Equivalence [Question #3]
2. Alternate Version of Question 4:
Why does Fleurbaey want to turn our allocation principles into social ordering criteria when we move into less-idealized “second-best” cases? How do Conditional Equality and the espoused versions of Egalitarian-Equivalence fare under this transition?