Win-Win Utilitarianism: The Greatest Good For the Greatest Number

April 20th, 2009

Scott Sumner at The Money Illusion has a very interesting (followup) post on Utilitarianism–the doctrine (as here described on Wikipedia) that “the moral worth of an action is determined solely by its contribution to overall utility: that is, its contribution to happiness or pleasure as summed among all persons.”

In other words, aggregate utility or aggregate “goodness.”

He makes a very good point:

…the utilitarian policy criterion doesn’t explicitly mention equality, but utilitarianism is actually a radically egalitarian value system in two different senses. … [1] utilitarianism treats the well-being of every human being equally … [2] it almost certainly favors egalitarian distributions (other things equal), as an extra dollar is probably valued by a poor person much more highly than by a rich person.  Thus rather than viewing egalitarianism as a separate liberal value, I believe that it makes more sense to view it as an implication of utilitarianism.

…utilitarianism implies that no income inequality is justified under any grounds other than efficiency.

In other words, under this thinking, if the efficiency of a policy makes everyone better off, then any resulting inequality is justified. Otherwise not.

He again addresses the problem with this full-blown pareto-efficient utilitarianism (in which a policy must not make any individual worse off) in quite cogent terms:

Consider a policy that had a tiny adverse effect on the lowest class (equivalent to the disutility of a mosquito bite), but made everyone else (including the slightly less poor) massively better off.

But he doesn’t address the functional reality: that many policies which make the poor and somewhat poor better off also serve to make everyone better off. At least this is demonstrably true in prosperous countries since world World War II, if we use the rather crude measure of growth in GDP per capita (i.e. prosperity) to gauge aggregate utility.

Countries with more progressive tax systems grow faster than others.

Countries with more wealth equality grow much faster than others.

Countries with more generous social programs and redistribution regimes grow at least as fast as others.

More-equal countries provide more opportunity for people to climb the economic ladder.

Do these facts put us in a position to expound a doctrine that might be aptly called Win-Win Utilitarianism?

  1. Kieran Latty
    December 16th, 2011 at 21:24 | #1

    This is absolutely the case, for a utilitarian analysis of income inequality, including calculation of the welfare losses that result from inequality, see this paper:

  2. December 17th, 2011 at 09:58 | #2

    @Kieran Latty

    Thanks for this, Kieran. Wow: 47% of GNI! My brief scan tells me that I probably don’t have the technical wherewithal to evaluate the assertions in your paper. But it’s on my stack to write about, hopefully other readers can help me with that.

    It’s really amazing how many economists seem to completely forget about marginal utility (and associated variable incentive effects) when evaluating things, simply assuming that a dollar arriving here has the same effect as a dollar landing there…

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