Evaluating Institutions and Outcomes: Fairness

5.3 of The Economy 1.0 & The Economy #3

How can allocations be judged unfair?

How unequal they are: Income, wellbeing… These rely on substantive judgements of fairness, which care for the characteristics of the allocation

How they came about: By force, competition, random… These rely on procedural judgements of fairness, which care for an evaluative viewpoint on how the allocation came about.

When considering substantive judgements, because they care for inequality of the allocation, what specific type?

-Income: Reward in money of one’s command over valued goods and services

-Happiness: Certain types of indicators are utilised to show this

-Freedom: The extent to which one can do/be what one wants without limits

When considering procedural judgements, what evaluative views would be considered?

Voluntary exchange of private property gained by legitimate means - Did the actions leading to the allocation result from free choices, their own labour, fraud, or by force?

Equal opportunity for economic advantage - Was there any discrimination/disadvantages at play in gaining a share of the pie? Or was it genuinely equal for all players?

Deservingness: Did the rules of the game factor in how hard one worked? Did it upheld social norms

With the game between the Proposer and the Responder, how can we make it procedurally fair?

-Proposers are chosen randomly

-Game is played anonymously (removes any type of bias)

-Discrimination = nah

-Actions = voluntary. The responder can refuse, the proposer can put out any offer

What did John Rawls (1921-2002) talk about regarding fairness?

-Adopt the idea that fairness applies to all people. Then, we imagine a veil of ignorance is imposed. We have literally got no idea where we are in society, and what characteristics we have.

-Thus, because of this veil, we make the judgement. From what the institutions should like in particular. And that usually trends towards equal opportunity and greater fairness

Economics can not eliminate disagreements on questions of value. But it can clarify what?

How dimensions of unfairness can be connected: Like how the rules of the game affect the degree of inequality

Trade-offs between dimensions of fairness: Do we have to compromise on the equality of income for equality of opportunity?

Public policies to address unfairness, and if they conflict with other objectives