Old wine in new casks: libertarian paternalism still violates liberal principles

Libertarian Paternalism (LP) purports to be a kind of paternalism that is “liberty-preserving” and hence compatible with liberal principles. In this paper, I argue against this compatibility claim. I show that LP violates core liberal principles, first because it limits freedom, and secondly because it fails to justify these limitations in ways acceptable to liberal positions. In particular, Libertarian Paternalists argue that sometimes it is legitimate to limit people’s liberties if it improves their welfare. A closer look at the welfare notions used, however, reveals that they respect neither the subjectivity nor the plurality of people’s values. Thus its justification of the liberty-welfare trade-off is not compatible with liberal principles. I conclude that to justify LP policies, one must appeal to traditional paternalistic principles—and thus, there is no categorical difference between “libertarian” and other forms of paternalism.     

Multi-profile intergenerational social choice

In an infinite-horizon setting, Ferejohn and Page showed that any social welfare function satisfying Arrow’s axioms and stationarity must be a dictatorship of the first generation. Packel strengthened this result by proving that no collective choice rule generating complete social preferences can satisfy unlimited domain, weak Pareto and stationarity. We prove that this impossibility survives under a domain restriction and without completeness. We propose an alternative stationarity axiom and show that a social welfare function on a specific domain satisfies this modified version and some standard social choice axioms if and only if it is a chronological dictatorship.     

‘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.     

Consistency between tastes and values: A universalization approach

The object of this paper is to propose a consistency test for an individual involved in collective choice process. Collective choice processes considered in the paper are those that transform individuals ‘tastes’– which reflect the self-interested view point of the individuals – into (social) ranking of alternatives. In addition to her tastes, an individual has values about the way by which collective decision should be made. We distinguish two categories of such values. First, there are end-values that restrict the class of social rankings that the individual considers ethically acceptable. Second there are aggregation-values that specify the way by which the social ranking should depend upon the individuals tastes. The consistency test stands on an hypothetical operation of universalization of the individual tastes to everyone. Five illustrations of the potential usefulness of our approach for interpreting social choice theory and welfare economics are proposed. These illustrations deal with utilitarian aggregation in the presence of income inequality aversion, the so-called ‘ethics of responsibility’ and the aggregation of individual ranking of opportunity sets based on their freedom of choice. A discussion of the relevance of the consistency test for addressing the problem of ‘laundering’ individual preferences is also provided. Received: 25 June 1998/Accepted: 16 March 1999     

The use of happiness research for public policy

Research on happiness tends to follow a “benevolent dictator” approach where politicians pursue people’s happiness. This paper takes an antithetic approach based on the insights of public choice theory. First, we inquire how the results of happiness research may be used to improve the choice of institutions. Second, we show that the policy approach matters for the choice of research questions and the kind of knowledge happiness research aims to provide. Third, we emphasize that there is no shortcut to an optimal policy maximizing some happiness indicator or social welfare function since governments have an incentive to manipulate this indicator.     

Anonymity and neutrality in Arrow’s Theorem with restricted coalition algebras

 In the very general setting of Armstrong (1980) for Arrow’s Theorem, I show two results. First, in an infinite society, Anonymity is inconsistent with Unanimity and Independence if and only if a domain for social welfare functions satisfies a modest condition of richness. While Arrow’s axioms can be satisfied, unequal treatment of individuals thus persists. Second, Neutrality is consistent with Unanimity (and Independence). However, there are both dictatorial and nondictatorial social welfare functions satisfying Unanimity and Independence but not Neutrality. In Armstrong’s setting, one can naturally view Neutrality as a stronger condition of informational simplicity than Independence. Received: 11 August 1994/Accepted: 1 April 1996     

Exclusive representation in public employment: A public choice perspective

Public sector unionization has grown rapidly in recent years, and research has suggested that among the reasons for such growth is legislation granting special privileges to public employee unions. This paper examines one form of legislative privilege, exclusive representation, from a public choice perspective. It is shown that exclusivity reduces employees’ freedom of choice, increases the welfare of union leaders at the expense of union members, limits employment opportunities to “outsiders,” entrenches the monopoly provision of public services, and generates conflict and instability in labor relations.     

Non-anonymous growth incidence curves, income mobility and social welfare dominance

The distributional incidence of growth is generally analyzed by comparing the quantiles of the pre- and post-growth income distribution—e.g. the so-called Growth Incidence Curves. Such an approach based on an implicit re-ranking of individual incomes ignores income mobility by assuming that only post-growth income matters in social welfare. By contrast, this paper takes the view that “status quo matters” and that social welfare should logically be defined on both inital and terminal income. This leads to consider ’non-anonymous’ Growth Incidence Curves that plot income growth rates against the various quantiles of the initial distribution. Dominance criteria that generalize those available for standard growth incidence curves are derived, which account for the inequality of individual income changes, conditional on initial income. An application to the cross-country distributional feature of global growth illustrates the analysis.     

Utility, informed preference, or happiness: Following Harsanyi's argument to its logical conclusion

Harsanyi (1997) argues that, for normative issues, informed preferences should be used, instead of actual preferences or happiness (or welfare). Following his argument allowing him to move from actual to informed preferences to its logical conclusion forces us to use happiness instead. Where informed preferences differ from happiness due to a pure concern for the welfare of others, using the former involves multiple counting. This “concerning effect” (non-affective altruism) differs from and could be on top of the “minding effect” (affective altruism) of being happy seeing or helping others to be happy. The concerning/minding effect should be excluded/included in social decision. Non-affective altruism is shown to exist in a compelling hypothetical example. Just as actual preferences should be discounted due to the effects of ignorance and spurious preferences, informed preferences should also be discounted due to some inborn or acquired tendencies to be irrational, such as placing insufficient weights on the welfare of the future, maximizing our biological fitness instead of our welfare. Harsanyi's old result on utilitarianism is however defended against criticisms in the last decade. Harsanyi (1997) argues, among other things, that in welfare economics and ethics, what are important are people's informed preferences, rather than either their actual preferences (as emphasized by modern economists) or their happiness (as emphasized by early utilitarians). The main purpose of this paper is to argue that, pursuing Harsanyi's argument that allows him to move from actual to informed preferences to its logical conclusion forces us to happiness as the ultimately important thing. The early utilitarians were right after all! Since I personally approve of Harsanyi's basic argument, I regard myself as his follower who becomes more Catholic than the Pope. (It is not denied that, in practice, the practical difficulties and undesirable side-effects of the procedure of using happiness instead of preferences have to be taken into account. Thus, even if we ultimately wish to maximize the aggregate happiness of people, it may be best in practice to maximize their aggregate preferences in most instances. This important consideration will be largely ignored in this paper.) The secondary objective is to give a brief defence of Harsanyi's (1953, 1955) much earlier argument for utilitarianism (social welfare as a sum of individual utilities) that has received some criticisms in the last decade. The argument (e.g. Roemer 1996) that Harsanyi's result is irrelevant to utilitarianism is based on the point that the VNM (von Neumann-Morgenstern) utility is unrelated to the subjective and interpersonally comparable cardinal utility needed for a social welfare function. Harsanyi's position is defended by showing that the two types of utility are the same (apart from an indeterminate zero point for the former that is irrelevant for utilitarianism concerning the same set of people). Received: 29 May 1997 / Accepted: 3 November 1997     

The possibility of group choice: pairwise comparisons and merging functions

Preferences in Arrow’s conditions are ordinal. Here we show that when intensity of preference represented by reciprocal pairwise comparisons is considered, it is always possible to construct an Arrowian social welfare function using a two-stage social choice process. In stage 1, the individual pairwise relations are mapped into a social pairwise relation. In stage 2, the social pairwise relation is used to generate a cardinal ranking and this ranking is then used to select a particular member of the choice set.     

Non-Profit Organizations in Mental Health: Their Roles as seen in Research

Non-profit organizations (NPO) for mental health are becoming significant actors. Here, their roles in welfare society as understood in research are identified and analyzed. Results from recent research publications on the mental health field are synthesized and categorized in order to find out their origin, theoretical orientation, and view on mental health NPO’s in relation to the public welfare systems. Relevant publications are primarily from the US, empirically oriented, and addressing surveys on both individual and organizational level. NPOs were most often seen as consensus-oriented service organizations, while very few (4%) were seen as conflict-oriented advocates (i.e., anti-professional). It is concluded that these NPOs are most often studied as complements or alternatives to existing public welfare services rather than on their own terms, and that research on the topic lacks more complex theoretical attempts.     

A Response to <Emphasis Type="BoldItalic">No One Ever Asked Us</Emphasis>: A Review of Children’s Experiences in Out-of-Home Care

Recent research on children in out-of-home care has highlighted their demographic characteristics, their physical and mental health status, and case outcomes, yet the body of literature examining children’s perspectives on care is relatively limited. This review provides an overview of almost two dozen studies examining children’s experiences of care. Findings from studies involving interviews with current and former foster youth are reviewed in relation to four child welfare goals: (1) protecting children from harm; (2) fostering children’s well-being; (3) supporting children’s families; and (4) promoting permanence. Implications for improved child welfare practice are offered.     

A note on social choice theory without the Pareto principle

This paper was originally submitted to Journal of Economic Theory and was accepted. After presenting it at the first meeting of the society for social choice and welfare in Caen, France, we were informed by Professor Bernard Monjardet that a weak version of our main result (Proposition 1) had been proved in Y. Murakami's book, Logic and Social Choice, Routledge and Kegan Paul, London, 1968. We later voluntarily withdrew the paper from JET even though the editor was still willing to publish it on the ground that it would do the profession a service by making more people aware of a simple yet fundamental result in social choice theory. Instead we decide to submit this paper to Social Choice and Welfare, hoping that it will reach the intended readers more effectively.     

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.     

The proximity condition

We investigate the social choice implications of what we call “the proximity condition”. Loosely speaking, this condition says that whenever a profile moves “closer” to some individual’s point of view, then the social choice cannot move “further away” from this individual’s point of view. We apply this idea in two settings: merging functions and preference aggregation. The precise formulation of the proximity condition depends on the setting. First, restricting attention to merging functions that are interval scale invariant, we prove that the only functions that satisfy proximity are dictatorships. Second, we prove that the only social welfare functions that satisfy proximity and a version of the Pareto criterion are dictatorships. We conclude that either proximity is not an attractive normative requirement after all, or we must give up some other social choice condition. Another possibility is that our normative intuition about proximity needs to be codified using different axioms.     

Part of the welfare mix: The third sector as an intermediate area

This article presents a conceptional framework which analyses the third sector as a part of a mixed welfare system, otherwise made up of the market, the state and the informal private household spheres. From this perspective, the third sector appears as a dimension of the public space in civil societies: an intermediate area rather than a clear-cut sector. Third sector organisations are understood as polyvalent organisations whose social and political roles can be as important as their economic ones; they are portrayed as hybrids, intermeshing resources and rationales from different sectors. In present policies of ‘welfare pluralism’ the emphasis is consequently more on ‘synergetic’ mixes of resources and rationales than on mere issues of substitution processes between different sectors of provision. The last section discusses the potential distinguishing features of such policies with respect to ‘pluralist’ approaches which try to safeguard the conventional hierarchies in a mixed economy of welfare. This paper draws in part on the author's introduction to Evers and Svetlik (1993).     

PERSPECTIVE ARTICLE: The impact of Nordic countries’ family friendly policies on employment,wages, and children

The Nordic countries at the same time exhibit a remarkably high participation rate of mothers and a more moderate decline in fertility rates compared to other Western countries. This has been attributed to the fact that the welfare state model and, especially, the family friendly policies chosen in the Nordic countries are unique. In this paper we evaluate the impact of Nordic countries’ family friendly policies on employment, wages and children’s well-being. We demonstrate that, although the ‘Nordic model’ has been successful in boosting female employment, it is a costly solution. Furthermore, family-friendly policies mainly directed towards giving mothers the right to be on long paid maternal leave have adverse effects on women’s wages with consequences for gender equality. Indeed, extensive family-friendly schemes may even have created a ‘system-based glass ceiling’ hindering women’s career progression. There is no evidence however of a trade-off between family-friendly policies and family welfare as effects on child development and children’s well-being of publicly provided child-care are found to be modest or even positive.

Government Sanctioned “Tight” and “Loose” Slot Machines: How Having Multiple Versions of the Same Slot Machine Game May Impact Problem Gambling

In Ontario, Canada, the regulator approves identical looking slot machine games with different payback percentages. We gained access to the design documents (called PAR Sheets) used to program these different versions of the same slots game and ran Gambler’s Ruin simulations of 2,000 first-time players who each arrived with a $100 bankroll and played either the 85 or 98% version of the same game until broke. Simulations revealed that the typical (median) player’s experience did not differ significantly between versions. However the payback percentage affected the experience of players in the upper tails of the distributions with those in the 98% version having dramatically more total spins, winning spins, entries into the “bonus mode”, and “hand pays” (a win of $100 bankroll and played either the 85 or 98% version of the same game until broke. Simulations revealed that the typical (median) player’s experience did not differ significantly between versions. However the payback percentage affected the experience of players in the upper tails of the distributions with those in the 98% version having dramatically more total spins, winning spins, entries into the “bonus mode”, and “hand pays” (a win of 125 or more on a given spin). Most importantly, the number of simulated players who had a maximum peak balance in excess of $1,000 rose tenfold—from 5 in the 85% version to 54 in the 98% version. The results are discussed in terms of the Pathways Model of Problem and Pathological Gambling especially in terms of behavioural conditioning, cognitive beliefs, and early big wins. It may well be that those machines that are on the surface the “fairest” to the gambler, actually pose the most risk for ensuing gambling problems.     

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.