I am a welfare economist, working on fairness in economics, and I would like your opinion on some distributional dilemma.
Suppose we have the following situation:
A country is endowed with some resources. For instance, the government conceded the exploitation of a waterfall to an electricity company and receives in exchange a certain share of the water and electricity monthly production of the firm. The government decides to distribute these resources (monthly electricity and water) directly to the population.
Let’s make the following assumptions:
- The individuals in the population do not differ in needs. It is not the case that some are badly hill and others in good shape. Also this water and this electricity are “extra” resources: a decent consumption of water and electricity is already guaranteed independently of the availability of these additional resources.
- Individuals do not have legitimate claims over some of the resources. The waterfall lies in a remote unpopulated part of the country that was owned by no-one, and no-one is negatively affected by the production.
- However, people differ in preferences: some like to have more water, some like to have more electricity. So the government might decide not to give the same share to everyone. It might decide to give a larger share of water to those who prefer larger quantity of water over electricity and vice-versa.
Now suppose that the citizens do not only have preferences over what they receive, but also compare the share they receive with what others receive: they have other-regarding preferences. It might be the case, for instance, that
- Jane prefers electricity over water. SHe receive a package with relatively more water, say 2% of the monthly production of water and 1% of the monthly production of electricity
- Kate prefers water over electricity and receives the opposite package: 2% of the electricity production and 1% of the water production.
- Although Jane prefers her package to Kate’s, Jane is hurt by the fact that Kate receives more electricity than her.
- So Jane would prefer that Kate receive less electricity, even if her dotation was the same, only because she would suffer less if Kate did not had more electricity than her. In that sense, she has other-regarding preferences, preferences that do not depend only on what she gets, but also on what other get.
My questions are the following :
Should the fact that people have other-regarding preferences influence in any way the way the government will distribute the resources? On which normative grounds?
If the government decided to take other-regarding preferences into account, what kind of objectives should it pursue? So far I have envisaged two possibilities:
- The government could want to equalize some notion of well-being taking other-regarding into account. For instance, someone who is hurt by receiving less of a resource than another could be compensated by receiving more resources than one who does not care about what others receive.
- The government could want to minimize destructive social sentiments such as jealousy. For instance, if two way of allocating the resources are deemed equivalent, but one features “more” jealousy than another, the government might want to implement the one with less jealousy.