Working Paper: NBER ID: w9622
Authors: Louis Kaplow; Steven Shavell
Abstract: 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.
Keywords: fairness; welfare; Pareto principle; distributive justice
JEL Codes: D63; H43; K00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pursuing fairness principles (D63) | reduce overall welfare (D69) |
| prioritizing fairness (D63) | scenarios where every individual's wellbeing is diminished (I31) |
| fairness-based approach (e.g., corrective justice) (D63) | lower overall welfare (D69) |
| welfare-based approach (e.g., strict liability) (K13) | higher overall welfare (D69) |
| social norms (Z13) | influence perceptions of fairness (D63) |