Health and fairness with other-regarding preferences
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Health and fairness with other-regarding preferences Aitor Calo-Blanco1 Received: 4 March 2019 / Accepted: 4 June 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This paper explores how to rank social allocations when individuals have otherregarding preferences (ORPs). Unlike the few existing studies on this issue, we focus on two different private goods, only one of which generates ORPs concerns. Specifically, individuals exhibit other-regarding views about the social health state but have standard self-centered preferences over other goods, namely consumption. Our social evaluation also incorporates a fairness view that aims to reduce inequalities that originate from factors for which individuals should not be deemed responsible. By resorting to a non-resourcist approach, we derive social preferences that seek to reduce individual well-being inequalities. Such differences are assessed by means of an interpersonal comparable measure that is related to an ideal situation which involves neither externalities nor unfair inequalities. We obtain that the use of the state of perfect health as the reference value leads society to give a higher priority to those who exhibit more altruistic preferences. Keywords Health · Fairness · Other-regarding preferences · Social ordering function JEL Classification D62 · D63 · D71 · I14
1 Introduction Behavioural economists have drawn attention to the importance of other-regarding preferences (ORPs) in the evaluation of individual well-being (see Fehr and Schmidt 2006). Unlike standard self-centered preferences, ORPs assume that individuals care about others’ situation as well as their own (e.g., Luttmer 2005; Clark et al. 2008). As a result the literature on ORPs has rapidly expanded by including these individual otherregarding views about others’ situation in the standard economic modelling (see Sobel 2005; Dufwenberg et al. 2011). Nevertheless, the inclusion of such views in the branch
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Aitor Calo-Blanco [email protected] Departamento de Economía, Universidade da Coruña, Campus de A Coruña, 15071 A Coruña, Spain
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that studies the formal analysis of redistributive results under normative principles has been barely studied. Fleurbaey (2012) exhaustively defends the view that ORPs should be taken into account, at least to some extent, in order to provide a more appropriate evaluation of social welfare. Accordingly, Decerf and Van der Linden (2016) and Treibich (2019) examine how basic fairness and efficiency principles determine the construction of social rankings when agents have heterogeneous ORPs. Following this line of research, the aim of our paper is to construct social preferences when individuals care about the overall health state in their society, and moreover they differ in both their initial resources and their health care needs. There are, at least, two important reasons to focus on a good such as health. First, as Fleurbaey and Schokkaert (2011) emphasise, the individual trade-off between health and other goods p
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