SUBJECTIVE ELEMENTS IN RAWLSIAN CONTRACTUAL AGREEMENT ON DISTRIBUTIONAL RULES

Rawls (1971) argued that individuals choosing institutions from behind the veil of ignorance would unanimously agree on institutions that maximized the imputations of the least advantaged persons in the post-choice social outcome. Critics have argued that the Rawlsian contract requires risk averse individuals. Our paper focuses on the contractual element inherent in constitutional choice when individuals have differing subjective estimates of the working properties of different institutions. We show that in genuinely Rawlsian contractual settings there may exist a general bias toward the selection of institutions that embody maximin solutions without the assumption of risk aversion.     

$${\mathcal{Q}}$$-anonymous social welfare relations on infinite utility streams

This paper studies a class of social welfare relations (SWRs) on the set of infinite utility streams. In particular, we examine the SWRs satisfying -Anonymity, an impartiality axiom stronger than Finite Anonymity, as well as Strong Pareto and a certain equity axiom. First, we characterize the extension of the generalized Lorenz SWR by combining -Anonymity with Strong Pareto and Pigou–Dalton Equity. Second, we replace Pigou–Dalton Equity with Hammond Equity for characterizing the extended leximin SWR. Third, we give an alternative characterization of the extended utilitarian SWR by substituting Incremental Equity for Pigou–Dalton Equity.     

An Analysis of State–Civil Society Relations in Finland: A Case of Joensuu

Theoretical researches have argued that state–civil society relations differ from one country to another because of different economic, political, and socio-cultural factors. This article aims to show civil society’s role in the Finnish welfare state and how the state and the civil society affect each other in Joensuu, a 72,167 populated Finnish city. Joensuu case is analyzed from the theoretical perspectives of Esping-Andersen (The three worlds of welfare capitalism, 1990), Young (Nonprofit Volunt Sector Q 29:149–172, 2000), and Schofer and Fourcade-Gourinchas (Am Sociol Rev 66: 806–828, 2001) by taking into account interviews with 13 members of voluntary organizations in the city. In the light of the field work, the argument is based on the negative impact of welfare system’s transformation process on nongovernmental organizations in Joensuu, Finland.     

Comparing degrees of inequality aversion

We propose a straightforward dominance procedure for comparing social welfare orderings (SWOs) with respect to the degree of inequality aversion they express. Three versions of the procedure are considered, each of which uses a different underlying criterion of inequality comparisons: (i) a concept based on the Lorenz quasi-ordering, which we argue to be the ideal version, (ii) a concept based on a minimalist criterion of inequality, and (iii) a concept based on the relative differentials quasi-ordering. It turns out that the traditional Arrow–Pratt approach is equivalent to the latter two concepts for important classes of SWOs, but that it is profoundly inconsistent with the Lorenz-based concept. With respect to the problem of combining extreme inequality aversion and monotonicity, concepts (ii) and (iii) identify as extremely inequality averse a class of SWOs that includes leximin as a special case, whereas the Lorenz-based concept (i) concludes that extreme inequality aversion and monotonicity are incompatible.     

‘Non-interference’ implies equality

We propose a new principle of ‘non-interference’ applied to social welfare orderings. The principle, together with two other standard requirements, implies a strong egalitarian conclusion: the ordering must lexicographically maximize the welfare of the worst off. The first version of this paper was written when Mariotti was visiting Bocconi University. Their generous hospitality and financial support through a Research Fellowship is gratefully acknowledged. A previous version of this paper written by Mariotti alone was circulated with the title ‘Liberalism implies equality’. We thank Ken Binmore, Paola Manzini, Juan Moreno Ternero and two referees for helpful comments. The responsibility for any error is our own.     

State dependence in sequential equity judgements

We report the results from a questionnaire-type experiment designed to elicit whether individuals decide in accordance with the equity axiom constituent for Rawls’s second principle. The experiment is sequential in nature. Hence it generates panel data. We use recently developed panel data methods for studying the role that state dependence and unobservable individual-specific effects play for the observed equity judgements. The results indicate that a dominant share of our probants initially adhere to Hammond’s equity axiom, but that many of these leave the Rawlsian position at later stages of the experiment. Although state dependence plays a significant role it cannot alone explain the observed decision behavior. Individual-specific effects are also important.     

Utility-gap Dominances and Inequality Orderings

The justification for using Lorenz dominance as an inequality ranking condition has been based on the aggregate social welfare comparison and the Pigou–Dalton principle of transfers. Since both the aggregating aspect of the social welfare function and certain implications of the principle of transfers are debatable, ordering conditions stronger than Lorenz dominance are worth exploring. A particularly interesting direction to pursue is to follow the frequently invoked notion that inequality is the “gap” between the rich and the poor. This paper follows this notion to formally propose a unified utility-gap concept and characterizes several utility-gap based conditions as general stronger-than-Lorenz-dominance ranking criteria. Specifically, we propose utility-gap dominance which requires all pair-wise utility-gaps in one distribution to be uniformly smaller than those of the other distribution. We then explore a conceptually weaker dominance concept – quasi dominance – which imposes conditions only on the gap between each person’s utility and some reference utility point of the distribution. I am grateful to two anonymous referees and Peter Lambert for their very constructive comments and suggestions on an earlier version of the paper. The usual caveat applies.     

Informative voting and condorcet jury theorems with a continuum of types

We consider a model of information aggregation in which there are two possible states of the world and agents receive private signals from the set of probability measures over the binary state space – the unit interval. For a reasonably general set of signal densities, a unique symmetric Bayesian Nash equilibrium in responsive strategies exists and voting is informative in this equilibrium. Asymptotic analysis shows that society makes the correct decision almost surely as population size grows. In contrast to findings of Feddersen and Pesendorfer (1998) in the finite signal space case and Duggan and Martinelli (1999) in an alternative model in which the signal space is a continuum, this result holds for unanimity rule. The key to the efficiency of unanimity rule is that there are perfectly informative (or at least nearly perfectly informative) signals. A corollary to the asymptotic efficiency result is that for all rules the collective performs better than a single agent's dictatorship for large but finite populations. This need not be true for arbitrary population sizes. Received: 10 May 1999/Accepted: 25 September 2000     

Size and distribution trade-offs for the leximin ordering

A relative invariant and an absolute invariant inequality ordering satisfying extreme bottom-sensitivity, are proposed. It is shown that the leximin social welfare ordering can be expressed in terms of a ranking of distributions on the sole basis of their size, measured by the mean, and the degree of inequality, measured according to these inequality concepts. Leximin thus exhibits extreme bottom-sensitivity. This property does not withstand that leximin prefers a larger size of the cake at the cost of higher inequality in a number of cases. These trade-offs between size and equality are characterised in terms of degrees of dominance of the lower parts of the ordinary and absolute Lorenz curves that are accepted by leximin for a given increase in the mean.     

Is abstention an escape from Arrow’s theorem?

In a society of variable size, Quesada (Soc Choice Welfare 25(1): 221–226, 2005) establishes the existence of Arrovian social welfare functions which are not dictatorial. We show that this escape from the Arrovian impossibility collapses when a very mild monotonicity condition is introduced.     

Deprivation,welfare and inequality

We provide a characterization of the generalised satisfaction—in our terminology non-deprivation—quasi-ordering introduced by S.R. Chakravarty (Keio Econ Stud 34:17–32, (1997)) for making welfare comparisons. The non-deprivation quasi-ordering obeys a weaker version of the principle of transfers: welfare improves only for specific combinations of progressive transfers, which impose that the same amount be taken from richer individuals and allocated to one arbitrary poorer individual. We identify the extended Gini social welfare functions that are consistent with this principle and we show that the unanimity of value judgements among this class is identical to the ranking of distributions implied by the non-deprivation quasi-ordering. We extend the approach to the measurement of inequality by considering the corresponding relative and absolute ethical inequality indices. This is a shortened version of Magdalou and Moyes (2008), which contains the details of the proofs as well as an empirical illustration.     

Institutional foundations for a just society

The author distinguishes between fundamental justice and incremental justice and argues that the Harsanyian/Rawlsian, ex ante, concept of justice is the only concept of justice relevant to the design and evaluation of institutions. Unlike incremental justice for which a concensus as to what constitutes justice is generally not possible the conditions that satisfy the Harsanyian/Rawlsian concept of justice are derived from the assumptions of rationality and aversion to large risks, and the postulate of fairness. A concensus occurs not fortuitously but inevitably. The paper develops eight principles of institutional design that contribute towards a just society and that follow logically from these assumptions and postulates. The paper argues that these principles are by and large needed for social welfare maximization, so that justice is generally consistent with efficiency. The paper applies the theory to the concept of exploitation, crime and punishment, as well as labour market and social security, to illustrate the working of the principles developed.     

Interpersonal comparisons of utility and the policy paralysis problem

Several “Paretian” welfare rules are equivalent when policymakers know agents' characteristics, e.g., a policy is optimal if (a) any other policy making someone better off harms some agent, or (b) it is the maximum of some social welfare function. This paper extends these and other rules to environments where policymakers have a probability distribution over a state space of possible models. Under weak conditions, rule (a), which postulates ex ante preferences for agents, recommends some change from almost every status quo policy. Unfortunately, (a) requires a demanding form of interpersonal welfare comparability. Rule (b) labels all policies optimal if the state space obeys a weak diversity condition. Since the probabilities of states are irrelevant for this result, only a small perturbation of a model with no uncertainty generates policy paralysis. Received: 26 March 1997/Accepted: 16 November 1998     

Equal factor equivalence in economies with multiple public goods

We reconsider the problem of provision and cost-sharing of multiple public goods. The efficient equal factor equivalent allocation rule makes every agent indifferent between what he receives and the opportunity of choosing the bundle of public goods subject to the constraint of paying r times its cost, where r is set as low as possible. We show that this rule is characterized in economies with a continuum of agents by efficiency, a natural upper bound on everyone's welfare, and a property of solidarity with respect to changes in population and preferences. Received: 3 August 1995 / Accepted : 29 April 1997     

The measurement of transient poverty: Theory and application to Pakistan

The present paper investigates the measurement of transient poverty when each person's welfare level fluctuates due to exogenous risk. The paper namely characterizes the sensitivity of transient/chronic poverty decomposition with respect to the poverty line and to the expected welfare level so that the decomposition analysis will be based on solid theoretical foundations and be robust empirically. Theoretical results show that poverty measures associated with prudent risk preferences perform better than other measures in assuring that the value of transient poverty increases with the depth of chronic poverty and that the decomposition is not highly sensitive to the poverty line. Poverty measures such as those associated with constant relative risk aversion are thus superior to popular Foster–Greer–Thorbecke (FGT) measures such as headcount, poverty gap, and squared poverty gap indices. These theoretical arguments are confirmed empirically by the application of the decomposition to a two-period household panel dataset from rural Pakistan. The relative magnitudes of transient versus chronic poverty are more robust to changes in the poverty line when poverty measures associated with constant relative risk aversion are used than when FGT poverty measures are used.     

Civil Society or the State?: Recent Approaches to the History of Voluntary Welfare

Since the 1970s a drift away from state corporatist solutions to social welfare problems has had its parallel in an academic rediscovery of the voluntary sector. Revived confidence in non–statutory approaches often assumes two things. Firstly, that voluntary action is a vital component in civil society and that civil society itself is an attribute of liberal democracy. These ideas are central to the perceived 'crisis of the welfare state'. They are also related to debates about political culture and the future of democracy with the institutions of civil society cast positively as 'schools of citizenship'. Secondly, it is frequently assumed that there is an opposition in principle between the voluntary and the statutory and in some quarters an assumption (reversing an earlier presumption about the rationality of state welfare) that voluntary action is the superior mechanism (at least morally). The purpose of this paper is threefold. First, I want to reflect on the revival of interest in the role of the institutions of civil society in the history of welfare provision. Second, I will survey some recent approaches to voluntary action and 'civil society'. Third, in the process of this survey I discuss the relevance of these approaches to the study of past states of welfare.     

At the Eve of Convergence? Transformations of Social Service Provision in Denmark, Germany, and the United States

Increasing societal heterogeneity, changing demographics, and increasing public debt and fiscal constraints have recently challenged traditional “regime” approaches to welfare state development. Some scholars argue, against this background, that welfare states might plausibly move out of their “regime container” by opting in favor of similar solutions and responses. This potential trend toward “convergence” might, furthermore, be facilitated by the widespread use of new public management ideas and techniques for “reinventing government” by adopting market solutions to public problems. This article investigates whether such trends of convergence can be identified by comparing three different countries each traditionally looked upon as belonging to different welfare state regimes: Denmark, Germany, and the United States. More specifically the article looks at one important segment of welfare state activity, namely social services and related health care. To further focus the analysis, special attention is devoted to the changing role played by the third sector in delivering services. The research design, thus, differs from most comparative welfare state research. Instead of analyzing a broad set of quantitative indicators in a large number of countries, it is scrutinized how some of the same problem pressures and policy ideas are being interpreted and implemented in a small number of countries within one policy area. The analysis reveals that trends of convergence—conceptualized along four dimensions: ideas, regulation, mix of providers, and revenue mix—can be identified across the three cases, though this does not mean that the market share of nonprofit providers becomes the same. The study also reveals that fundamental aspects of state–nonprofit relations persist despite trends of convergence.     

‘One and a Half Dimensional’ Preferences and Majority Rule

I examine a model of majority rule in which alternatives are described by two characteristics: (1) their position in a standard, left-right dimension, and (2) their position in a good-bad dimension, over which voters have identical preferences. I show that when voters’ preferences are single-peaked and concave over the first dimension, majority rule is transitive, and the majority’s preferences are identical to the median voter’s. Thus, Black’s (The theory of committees and elections, 1958) theorem extends to such a “one and a half” dimensional framework. Meanwhile, another well-known result of majority rule, Downs’ (An economic theory of democracy, 1957) electoral competition model, does not extend to the framework. The condition that preferences can be represented in a one-and-a-half-dimensional framework is strictly weaker than the condition that preferences be single-peaked and symmetric. The condition is strictly stronger than the condition that preferences be order-restricted, as defined by Rothstein (Soc Choice Welf 7:331–342;1990).     

Taking empirical studies seriously: the principle of concentration and the measurement of welfare and inequality

The paper investigates the implications of empirical studies by Amiel and Cowell (J Public Econ 47:3–26, 1992) of the public’s attitude towards inequality. It demonstrates that the value judgments concerning the redistribution of income which have been revealed in these studies can be represented by the principle of concentration. A concentration is a redistribution of income which reduces the distance between each income and the average income in the same proportion. Imposing this principle and some other basic properties the paper characterizes several families of social welfare orderings which imply generalized Atkinson inequality measures. They do not necessarily satisfy the principle of progressive transfers. I thank two anonymous referees for helpful comments.     

A generalization of Campbell and Kelly’s trade-off theorem

This article considers social choice theory without the Pareto principle. We revisit the trade-off theorem developed by Campbell and Kelly (Econometrica 61:1355–1365, 1993) and generalize their result. By introducing an alternative measure of decisive structure, a dominance relation, we show that if a social welfare function dominates another social welfare function, then the number of pairs of alternatives which social ranking is independently of individual preferences under the former is not more than that under the latter. Moreover, we offer two applications of our main result.