3.6 Distribution and Diminishing Marginal Utility

Distributive Dimensions of Classical Utilitarianism

Exploring distributive politics—how the distribution of resources affects happiness and society's well-being.

Egalitarian Society Example:
- Simple society with three individuals each having 6 units of utility or dollars.
- Total utility is 18 units, evenly distributed.
Utility Monster Society Example:
- Individual A gains significant happiness from redistributing resources from individuals B and C to A.
- Bentham's Perspective:
  - Holds that maximizing total happiness is key, even if B and C are made miserable.
  - Utilitarianism favors actions that maximize total utility, ignoring individual experiences of misery among minority groups.

From 666 to 874 Utility Scenario:
- Movement from 666 units to 874 units increases overall happiness.
- Total utility rises, indicating improvement from Bentham’s standpoint.
Eichmann Problem:
- Case where A and B would exterminate C to gain greater utility.
- Bentham would accept this as it maximizes overall happiness, showcasing a morally troubling aspect of utilitarianism.

Distribution Shift with Limited Overall Utility:
- Even if total utility remains constant, Bentham sees acceptability in moving from equal distribution to one where certain groups have more.
- Ambiguity exists in whether maximizing happiness should focus on majority happiness or overall societal utility.

Understanding Diminishing Marginal Utility:
- Bentham acknowledged this principle: additional units of a good yield decreasing utility.
- Illustrations using real-life objects (like cars) help explain how initial increases in wealth lead to substantial happiness, but later increases yield diminishing returns.
Comparison of Incomes:
- An examination of the relationship between the income of a laborer and a millionaire.
- Bentham questions how much happier the wealthier individual is compared to the laborer, emphasizing that comparisons across classes are challenging.

Critical Note on Wealth Gains and Losses:
- People perceive wealth gains and losses differently. A loss (e.g., from $2 million to $1 million) impacts happiness more than a gain (from $500,000 to $1 million).
- Loss aversion theory suggests that individuals experience greater distress from losses than joy from equivalent gains.
- Behavioral economics (Kahneman and Tversky) illustrates the psychological ramifications of loss versus gain and challenges utilitarian perspectives by emphasizing human behavior.

Overall, while classical utilitarianism focuses on maximizing happiness and total utility, it raises ethical questions regarding the well-being of minorities or marginalized individuals within society. Understanding the nuances of wealth distribution and human psychology helps to illuminate the complexities behind simple utilitarian calculations.