Commodities and Capabilities presents a set of inter-related theses concerning the foundations of welfare economics, and in particular about the assessment of personal well-being and advantage. The argument presented focuses on the capability to function, i.e. what a person can do or can be, questioning in the process the more standard emphasis on opulence or on utility. In fact, a person's motivation behind choice is treated here as a parametric variable which may or may not coincide with the pursuit of (...) self-interest. Given the large number of practical problems arising from the roles and limitations of different concepts of interest and the judgement of advantage and well-being, this scholarly investigation is both of theoretical interest and practical import. (shrink)

Many recent political philosophers have attempted to demonstrate that choice and responsibility can be incorporated into the framework of an egalitarian theory of distributive justice. This article argues, however, that the project of developing a responsibility-based conception of egalitarian justice is misconceived. The project represents an attempt to defuse conservative criticism of the welfare state and of egalitarian liberalism more generally. But by mimicking the conservative’s emphasis on choice and responsibility, advocates of responsibility-based egalitarianism unwittingly inherit the conservative’s unsustainable justificatory (...) ambitions, unattractive moralism, and questionable metaphysical commitments. More importantly, they misrepresent the nature of our concern with equality as a value. (shrink)

Kasper Lippert-Rasmussen’s interesting criticisms of the ideal of equality of opportunity for welfare provide a welcome occasion for rethinking the requirements of egalitarian distributive justice.1 In the essay he criticizes I had proposed that insofar as we think distributive justice requires equality of any sort, we should conceive of distributive equality as equal opportunity provision. Roughly put, my suggestion was that equality of opportunity for welfare obtains among a group of people when all would have the same expected welfare over (...) the course of their lives if each behaved as prudently as it would be reasonable to expect her to behave. My specific proposal was more demanding, holding that when an age cohort reaches the onset of responsible adulthood, they enjoy equal opportunity for welfare when for each of them, the best sequence of choices that it would be reasonable to expect the person to follow would yield the same expected welfare for all, the second-best sequence of choices would also yield the same expected welfare for all, and so on through the array of lifetime choice sequences each faces. (In the jargon of my 1989 essay, equal opportunity for welfare obtains when everyone faces effectively equivalent sets of life options.). (shrink)

The nature of well-being is one of the most enduring and elusive subjects of human inquiry. Well-Being draws upon the latest scientific research to transform our understanding of this ancient question. With contributions from leading authorities in psychology, social psychology, and neuroscience, this volume presents the definitive account of current scientific efforts to understand human pleasure and pain, contentment and despair. The distinguished contributors to this volume combine a rigorous analysis of human sensations, emotions, and moods with a broad assessment (...) of the many factors, from heredity to nationality, that bear on our well-being. Using the tools of experimental science, the contributors confront the puzzles of human likes and dislikes. Why do we grow accustomed and desensitized to changes in our lives, both good and bad? Does our happiness reflect the circumstances of our lives or is it determined by our temperament and personality? Why do humans acquire tastes for sensations that are initially painful or unpleasant? By examining the roots of our everyday likes and dislikes, the book also sheds light on some of the more extreme examples of attraction and aversion, such as addiction and depression. Among its wide ranging inquiries, Well-Being examines systematic differences in moods and behaviors between genders, explaining why women suffer higher rates of depression and anxiety than men, but are also more inclined to express positive emotions. The book also makes international comparisons, finding that some countries' populations report higher levels of happiness than others. The contributors deploy an array of methods, from the surveys and questionnaires of social science to psychological and physiological experiments, to develop a comprehensive new approach to the study of well-being. They show how the sensory pleasures of the body can tells us something about the higher pleasures of the mind and even how the effectiveness of our immune system can depend upon the health of our social relationships. (shrink)

This book presents the definitive exposition of 'prospect theory', a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tversky, whose contributions are collected here for the first time. While remaining within a rational choice framework, prospect theory delivers more accurate, empirically verified predictions in key test cases, as well as (...) helping to explain many complex, real-world puzzles. In this volume, it is brought to bear on phenomena as diverse as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days. Theoretically elegant and empirically robust, this volume shows how prospect theory has matured into a new science of decision making. (shrink)

This book develops some of the most important themes of Sen's works over the last decade. He argues in a rich and subtle approach that we should be concerned with people's capabilities rather than their resources or welfare.

In his Tanner Lecture of 1979 called ‘Equality of What?’ Amartya Sen asked what metric egalitarians should use to establish the extent to which their ideal is realized in a given society. What aspect of a person’s condition should count in a fundamental way for egalitarians, and not merely as cause of or evidence of or proxy for what they regard as fundamental?

We model happiness as a measurement tool used to rank alternative actions. Evolution favors a happiness function that measures the individual’s success in relative terms. The optimal function, in particular, is based on a time-varying reference point –or performance benchmark –that is updated over time in a statistically optimal way in order to match the individual’s potential. Habits and peer comparisons arise as special cases of such updating process. This updating also results in a volatile level of happiness that continuously (...) reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness. (shrink)

The book reviews the theory and concepts of happiness, explaining how these concepts underpin a line of research that is both an attempt to understand the determinants of happiness and a tool for understanding the effects of a host of phenomena on human well being.

Philosophers perennially debate the nature of the good for humans. Is it subjective or objective? That is to say, do the things that are intrinsically good for an agent, good for their own sakes and apart from further consequences, acquire this status only in virtue of how she happens to regard them? Or are there things that are good in themselves for an individual independently of her desires and attitudes toward them? The issue sounds recondite, but has been thought to (...) be pregnant with implications for politics as it ought to be. Plato vigorously insists that knowledge of the good is precious and the person who has it is uniquely fit to rule: "In the world of knowledge, the last thing to be perceived and only with great difficulty is the essential Form of Goodness. Once it is perceived, the conclusion must follow that, for all things, this is the cause of whatever is right and good; in the visible world it gives birth to the light and to the lord of light, while it is itself sovereign in the intelligible world and the parent of wisdom and truth. Without having had a vision of this Form no one can act with wisdom, either in his own life or in matters of state.". (shrink)

Rawls' Difference Principle asserts that a basic economic structure is just if it makes the worst off people as well off as is feasible. How well off someone is is to be measured by an ‘index’ of ‘primary social goods’. It is this index that gives content to the principle, and Rawls gives no adequate directions for constructing it. In this essay a version of the difference principle is proposed that fits much of what Rawls says, but that makes use (...) of no index. Instead of invoking an index of primary social goods, the principle formulated here invokes a partial ordering of prospects for opportunities. (shrink)

Professor McKenzie proposes and formulates a method composed of operational procedures designed to facilitate the evaluation of economic projects and policies. This method is discussed fully, illustrated by simple examples, and compared with alternative procedures. An outline of a computer program that enables readers to undertake their own calculations is included. In order to present the approach clearly, the author provides an exposition of the fundamental ideas and the main alternative approaches to the problem. These rely on various forms of (...) index numbers and consumer surplus. However, as is well known, such measures are not capable of correctly ordering the various alternatives under consideration, except under highly unrealist assumptions. In this book the author suggests the abandonment of this traditional approach based on the concept of 'willingness-to-pay' or the conpensating variation. Instead, the measure that Samuelson has called the 'money-metric' should become the cornerstone of applied welfare economics. (shrink)

This paper distinguishes an index ordering and a social ordering function as a simple way to formalize the indexing problem in the social choice framework. Two main conclusions are derived. First, the alleged dilemma between welfarism and perfectionism is shown to involve a third possibility, exemplified by the fairness approach to social choice. Second, the idea that an individual is better off than another whenever he has more (goods, functionings, etc.) in all dimensions, which is known to enter in conflict (...) with the Pareto principle, can be partly salvaged by adopting the fairness approach. (shrink)

The book reviews the theory and concepts of happiness, explaining how these concepts underpin a line of research which is both an attempt to understand the determinants of happiness and a tool for understanding the effects of a host of phenomena on human well being.

This paper re-examines the welfare economics of risk. It singles out a class of criteria, the “expected equally-distributed equivalent”, as the unique class which avoids serious drawbacks of existing approaches. Such criteria behave like ex-post criteria when the final statistical distribution of wellbeing is known ex ante, and like ex-ante criteria when risk generates no inequality. The paper also provides a new result on the tension between inequality aversion and respect of individual ex ante preferences, in the vein of Harsanyi’s (...) aggregation theorem. (shrink)

What is a fair distribution of resources and other goods when individuals are partly responsible for their achievements? This book develops a theory of fairness incorporating a concern for personal responsibility, opportunities and freedom. With a critical perspective, it makes accessible the recent developments in economics and philosophy that define social justice in terms of equal opportunities. It also proposes new perspectives and original ideas. The book separates mathematical sections from the rest of the text, so that the main concepts (...) and ideas are easily accessible to non-technical readers. -/- It is often thought that responsibility is a complex notion, but this monograph proposes a simple analytical framework that makes it possible to disentangle the different concepts of fairness that deal with neutralizing inequalities for which the individuals are not held responsible, rewarding their effort, respecting their choices, or staying neutral with respect to their responsibility sphere. It dwells on paradoxes and impossibilities only as a way to highlight important ethical options and always proposes solutions and reasonable compromises among the conflicting values surrounding equality and responsibility. -/- The theory is able to incorporate disincentive problems and is illustrated in the examination of applied policy issues such as: income redistribution when individuals may be held responsible for their choices of labor supply or education; social and private insurance when individuals may be held responsible for their risky lifestyle; second chance policies; the measurement of inequality of opportunities and social mobility. (shrink)

How do we measure happiness? Focusing on subjective measures as a proxy for welfare and well-being, this book finds ways to do that. Subjective measures have been used by psychologists, sociologists, political scientists, and, more recently, economists to answer a variety of scientifically and politically relevant questions. Van Praag, a pioneer in this field since 1971, and Ferrer-i-Carbonell present in this book a generally applicable methodology for the analysis of subjective satisfaction. Drawing on a range of surveys on people's satisfaction (...) with their jobs, income, housing, marriages, and government policy, among other areas of life, this book shows how satisfaction with life "as a whole" is an aggregate of these domain satisfactions. Using German, British, Dutch, and Russian data, the authors cover a wide range of topics, even some not usually considered part of economic study.The book makes a distinction between actual satisfaction levels and individual norms, and in this way complements Van Praag's earlier work within the Leyden School with his later work in "happiness research". Among the many topics covered, the authors discuss: individuals' memory and anticipation processes and the estimation of adaptation phenomena ; the effect of reference groups on income norms and satisfaction with income; the importance of climate for well-being, including the development of a climate-equivalence index; the trade-offs between chronic diseases and income when well-being is kept constant; the damage of aircraft noise on well-being; the construction of a new talent tax tariff; and inequality from a satisfaction perspective, including the definition of "satisfaction inequalities", a natural extension of income inequality and poverty.This groundbreaking book presents new and fruitful methodology that consitutes a welcome addition to the social sciences. (shrink)