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This paper presents an infinite-horizon version of intergenerational utilitarianism. By studying discounted utilitarianism as the discount factor tends to one, we obtain a new welfare criterion: limit-discounted utilitarianism (LDU). We show that LDU meets the standard assumptions of efficiency, equity, and interpersonal comparability, but allows us to compare more pairs of utility streams than commonly used utilitarian criteria, including the overtaking criterion and the catching-up criterion. We also introduce a principle of compensation for postponements of utility streams and use it to characterize the LDU criterion on a restricted domain.

How to determine if a population group has better overall (multidimensional) health status than another is a central question in the health and social sciences. We apply a multidimensional first order dominance concept that does not rely on assumptions about the relative importance of each dimension. In particular, we show how one can explore the “depth” of dominance relations by gradually refining the health dimensions to see which dominance relations persist. We analyze a Danish health survey with many health indicators. These are initially collapsed into a single composite health dimension and then refined to four, seven, and ten health dimensions, each representing an (increasingly refined) area of health. Overall we find that younger age groups dominate older age groups in up to four dimensions, but no dominance relations are present with a more refined view of health. Comparing education groups, we often see dominance relations in four and seven dimensions, but the depth of the dominance vary considerably. We also compare groups based on gender, marital status, region, and ethnicity, where we generally find less dominance relations. Our empirical illustration shows that it is possible to operationalize and meaningfully apply the multidimensional first order dominance concept with gradual refinements of health status in up to ten health dimensions.

We revisit to what extent the increase in income inequality over the last 30 years has been mirrored by consumption inequality. We do so by constructing two alternative measures of consumption expenditure, using data from the Consumer Expenditure Survey (CE). We first use reports of active savings and after tax income to construct the measure of consumption implied by the budget constraint. We find that the consumption inequality implied by savings behavior largely tracks income inequality between 1980 and 2007. Second, we use a demand system to correct for systematic measurement error in the CE's expenditure data. Specifically, we consider trends in the relative expenditure of high income and low income households for different goods with different income (total expenditure) elasticities. Our estimation exploits the difference in the growth rate of luxury consumption inequality versus necessity consumption inequality. This "double-differencing,'' which we implement in a a regression framework, corrects for mis-measurement that can systematically vary over time by good and income group. This second exercise indicates that consumption inequality has closely tracked income inequality over the period 1980-2007. Both of our measures show a significantly greater increase in consumption inequality than what is obtained from the CE's total household expenditure data directly.

Starting from Schelling (1960) , several game theorists have conjectured that payoff equity might facilitate coordination in normal-form games with multiple equilibria – the more equitable equilibrium might be selected either because fairness makes it focal or because many individuals dislike payoff inequities, as abundant experimental evidence suggests. In this line, we propose a selection principle called Equity (EQ), which selects the equilibrium in pure strategies minimizing the difference between the highest and smallest money payoff, if only one such equilibrium exists. Using a within-subjects experimental design, furthermore, we study the relative performance of EQ in twelve simple 2 × 2 coordination games. In many of these games, we find that EQ explains individual behavior better than a large range of alternative theories, including theories of bounded rationality and several other equilibrium selection principles. Yet we also observe that the frequency of EQ play depends on the payoff structure of the game. For instance, EQ play diminishes when the alternative equilibrium is socially efficient and not very unfair (compared with the EQ equilibrium). Our data suggests that equilibrium selection is affected by several factors and that subjects are heterogeneous in this respect, but also that equity is often a crucial factor to understand coordination.

To better understand how support for redistributive policies is shaped by macroeconomic shocks, we explore how distributional preferences changed during the recent “Great Recession.” We conducted identical modified dictator games during both the recession and the preceding economic boom. The experiments capture subjects' selfishness (the weight on one's own payoff) and equality–efficiency tradeoffs (concerns for reducing differences in payoffs versus increasing total payoffs), which we then compare across economic conditions. Subjects exposed to recession exhibit greater selfishness and higher emphasis on efficiency relative to equality. Reproducing recessionary conditions inside the laboratory by confronting subjects with possible negative payoffs [weakly] intensifies selfishness and increases efficiency orientation, bolstering the interpretation that differing economic circumstances drive our results.

We show that every (random) assignment/allocation without transfers can be considered as a market outcome with personalized prices and an equal income. One can thus evaluate an assignment by investigating the prices and the induced opportunity sets. When prices are proportional across agents, the assignment is efficient; when prices are common, the assignment is both efficient and envy-free. Moreover, this market perspective reveals a weakness of envy-freeness.

Critics of carbon mitigation often appeal to what Jonathan Glover has called 'the argument from no difference': that is, 'if I don't do it, someone else will'. Yet even if this justifies continued high emissions by the industrialised countries, it cannot excuse business as usual. The North's emissions might not harm the victims of climate change in the sense of making them worse off than they would otherwise be. Nevertheless, it receives benefits produced at the latter's expense. This enrichment is unjust; unjustly-enriched agents ought to make compensation. The best form of compensation is vigorous action against climate change.

Technology is widely considered the main source of economic progress, but it has also generated cultural anxiety throughout history. The developed world is now suffering from another bout of such angst. Anxieties over technology can take on several forms, and we focus on three of the most prominent concerns. First, there is the concern that technological progress will cause widespread substitution of machines for labor, which in turn could lead to technological unemployment and a further increase in inequality in the short run, even if the long-run effects are beneficial. Second, there has been anxiety over the moral implications of technological process for human welfare, broadly defined. While, during the Industrial Revolution, the worry was about the dehumanizing effects of work, in modern times, perhaps the greater fear is a world where the elimination of work itself is the source of dehumanization. A third concern cuts in the opposite direction, suggesting that the epoch of major technological progress is behind us. Understanding the history of technological anxiety provides perspective on whether this time is truly different. We consider the role of these three anxieties among economists, primarily focusing on the historical period from the late 18th to the early 20th century, and then compare the historical and current manifestations of these three concerns.

This paper estimates historical intergenerational elasticities between fathers and children of both sexes in the United States using a novel empirical strategy. The key insight of our approach is that the information about socioeconomic status conveyed by first names can be used to create pseudo-links across generations. We find that both father-son and father-daughter elasticities were flat during the nineteenth century, increased sharply between 1900 and 1920, and declined slightly thereafter. We discuss the role of regional disparities in economic development, trends in inequality and returns to human capital, and the marriage market in explaining these patterns. (JEL D63, J12, J16, J24, J62, N31, N32) The degree to which economic status is passed along generations is key to under standing differences across societies and over time in the extent of inequality. A low degree of intergenerational mobility can undermine the notion of equality of opportunity and may lead to persistent inequality. Recent research reveals that today intergenerational mobility in the United States is lower than in most other developed countries (Corak 2013). This finding stands in contrast with the national ethos of the United States as the land of unlimited opportunity. Was this view ever justified? In this paper we provide a new perspective on the evolution of intergenerational mobility in the United States in the late nineteenth and early twentieth centuries. We extend the existing literature by looking at the intergenerational elasticity in economic status between fathers and children of both sexes. Focusing only on father-son cor relations may miss part of the picture. Daughters should be included if we want to know how the average well-being of a generation correlates with that of their parents.

This paper explores, in the context of the Atkinson inequality measure, attempts to make interpretations of orders of magnitude transparent. One suggestion is that the analogy of sharing a cake among a very small number of people provides a useful intuitive description for people who want some idea of what an inequality measure ‘actually means’. In contrast with the Gini measure, for which a simple ‘cake-sharing’ result is available, the Atkinson measure requires a nonlinear equation to be solved. Comparisons of ‘excess shares’ (the share obtained by the richer person in excess of the arithmetic mean) for a range of assumptions are provided. The implications for the ‘leaky bucket’ experiments are also examined. An additional approach is to obtain the ‘pivotal income’, above which a small increase for any individual increases inequality. The properties of this measure for the Atkinson index are also explored.

The capabilities approach of Amartya Sen and Martha Nussbaum has become an influential viewpoint for addressing issues of social justice and human development. It has not yet, however, given adequate theoretical consideration to the requirements of environmental sustainability. Sen has focussed on the instrumental importance of human development for achieving sustainability, but has failed to consider the limits of this account, especially with respect to consumption-reduction. Nussbaum has criticised constraining material consumption for its paternalistic prescription of one particular conception of the good life, without considering it as an imperative of justice. We discuss two possible extensions of the capabilities approach. First, the concept of capability ceilings contains several attractive elements, but it also suffers from some shortcomings. Therefore, second, we advocate constraining people's combinations of functionings in accordance with a personal budget which consists of a fair share of environmental resources.

Purpose– The purpose of this paper is to analyze the different dynamic characteristics of unemployment in a selected group of European Union countries during the current Great Recession, which had unequal consequences on employment depending on the country considered.Design/methodology/approach– The paper follows Shorrocks’s proposal of a duration-sensitive measure of unemployment, and uses cross-sectional data reported by Eurostat coming from European Labour Force Surveys.Findings– The results add some evidence on the relevance of incorporating spells’ duration in measuring unemployment, finding remarkable differences in unemployment patterns in time among European countries.Research limitations/implications– In this paper unemployment is analyzed for all the labor force. Future research should investigate patterns across specific groups such as young people, women, immigrants or the low skilled.Practical implications– It is generally accepted that the negative impact of unemployment on individual welfare can be very different depending on its duration. However, conventional statistics on unemployment do not adequately capture to what extent the recession is not only increasing the incidence of unemployment but also its severity in terms of duration in time of ongoing unemployment spells. The paper shows an easy and practical way to do it in order to improve the understanding of the unemployment phenomenon, using information usually reported by statistical offices.Originality/value– First, the paper provides a tool for dynamic analysis of unemployment based on reported cross-sectional data. Second, the paper demonstrates the empirical relevance of considering spells’ duration when assessing differences in unemployment across countries or in unemployment trends. This is usually neglected or only partially addressed by most conventional measures of unemployment.

We assess the evolution of consumption inequality in Canada over the years 1997 to 2009. We correct the imputation of shelter consumption for homeowners to allow for unobserved differences in housing quality correlated with selection into rental tenure, and we account for measurement error in this imputation. Using the annual Survey of Household Spending for years 1997 to 2009, we find that household-level consumption inequality measured by the Gini coefficient increased from 0.251 to 0.275 over 1997 to 2006. Between 2006 and 2007, consumption inequality may have decreased, and over 2007 to 2009, consumption inequality was flat. Over the entire period of 1997 to 2009, consumption inequality increased moderately. The Gini coefficient for individual-level consumption inequality followed a similar pattern, though the changes were smaller in magnitude. We also explore a possible correction for tail non-response bias in inequality measurement and find that the increase in measured consumption inequality is robust to this correction.

In the United States in the late 19th and early 20th century, large cities had extremely high death rates from infectious disease. Within major cities such as New York City and Philadelphia, there was significant variation at any point in time in the mortality rate across neighborhoods. Between 1900 and 1930 neighborhood mortality convergence took place in New York City and Philadelphia. We document these trends and discuss their consequences for neighborhood quality of life dynamics and the economic incidence of who gains from effective public health interventions.

We analyze preferences over redistribution in societies with costly (positive) sorting according to income. We identify a new motivation for redistribution, where individuals support taxation in order to reduce the incentives to sort. We characterize a simple condition over income distributions which implies that even relatively rich voters—with income above the mean—will prefer full equality (and thus no sorting) to societies with costly sorting. We show that the condition is satisfied for relatively equal income distributions. We also relate the condition to several statistical properties which are satisfied by a large family of distribution functions. (JEL D31, D63, H23)

The paper estimates the degree of intergenerational earnings persistence in South Africa. It explores the link between this measure of social mobility and an index of inequality of opportunity. Using microdata from the National Income Dynamics Study (NIDS), the paper finds that intergenerational earnings mobility in South Africa is low. In addition, a limited set of inherited circumstances explains a significant fraction of earnings inequality among male adults. Adding South Africa to the existing international literature supports the hypothesis that low levels of intergenerational mobility and equality of opportunity are emblematic of high-inequality emerging economies.

In the policy debate, intellectual property is often justified by what seems to be a straightforward argument: if innovators are not protected against others appropriating their ideas, incentives for innovation are suboptimally low. Now, in most industries and for most potential users, appropriating a foreign innovation is itself an investment decision fraught with cost and risk. Nonetheless, standard theory predicts too little innovation. Arguably the problem is exacerbated by the sensitivity of innovators to fairness; imitators do get a free lunch, after all. We model the situation as a game and test it in the lab. We find more appropriation, but also more innovation than predicted by standard theory. In the lab, the prospect of giving imitators a free lunch does not have a chilling effect on innovation. This even holds if innovation automatically spills over to an outsider and if successful imitation reduces the innovator's profit. Beliefs and the analysis of experiences in the repeated game demonstrate that participants are sensitive to the fairness problem. But this concern is not strong enough to outweigh the robust propensity to invest even more in innovation than predicted by standard theory. The data suggest that this behavior results from the intention not to be outperformed by one's peers.

Under what conditions do distributional preferences, such as altruism or a concern for fair outcomes, generate efficient trade? I analyze theoretically a simple bilateral exchange game: each player sequentially takes an action that reduces his own material payoff but increases the other player's. Each player's preferences may depend on both his/her own material payoff and the other player's. I identify two key properties of the second-mover's preferences: indifference curves kinked around “fair” material-payoff distributions, and materials payoffs entering preferences as “normal goods.” Either property can drive reciprocity-like behavior and generate a Pareto efficient outcome. (JEL C78, D63, D64)

In Piketty’s (2014) prominent book, Capital in the Twenty-First Century, he argues that the concentration of wealth may become increasingly extreme in the future. As Piketty reminds us, the group of rentiers—people living off accumulated capital—has been historically large and politically and socially influential. Because so much of large fortunes end up being inherited, the current concentration of wealth is bound to predict at least weakly, and perhaps strongly, how important rentiers will be. Regardless of whether one buys into depictions such as “the rentier, enemy of democracy” (p. 422), the extent to which the well-off are going to rely on work versus rely on the returns to their wealth in the future is clearly important for assessing the extent to which a society will view itself as in some way a meritocracy. Given that the US economy has experienced rising inequality in its income and earning distributions (for example, Piketty and Saez 2003; or see the symposium on “The Top 1 Percent” in the Summer 2013 issue of this journal), one would expect that the distribution of wealth would follow a similar path. However, available evidence on this topic is much more scant and conflicting than that on income and earnings. In fact, when Piketty (2014) reports direct estimates of wealth concentration for France, the United Kingdom, Sweden, and the United States in chapter 10 of his book, he finds as yet little evidence of dramatic increase in wealth concentration in any of these countries.

Preston's (2011) challenge to the moral presumption against geoengineering is applied to carbon dioxide capture and storage (CCS) in Scotland, United Kingdom. Qualitative data is analysed to assess if and how Preston's arguments play out in practice. We argue that the concepts of 'lesser evil' and prioritising human well-being over non-interference in natural processes do bring different value positions together in support of CCS, but that not all people see short-term carbon abatement as the 'least worst' option or a suitable way to prioritise human well-being.

Based on a Cobb-Douglas social welfare function in terms of the utilities of two concurrent generations, this paper derives a Pareto-efficient, envy-free, and equitable interest rate rule supported by a nonlinear-tax feedback rule in case of steady-state disturbance. The young are taxed to subsidize the elderly, expecting the same treatment when the young become old; hence, fiscal policy matters as much as the monetary policy does with regard to the ‘‘same’’. The emphasis on monetary policy lies rather in the fact that once the equilibrium status quo of a policy accommodative of a given tax subsidy-cum-interest rate scheme is disturbed, the ‘‘interest-rate part’’ will continue being a sensible policy choice only by manipulating the ‘‘tax-subsidy part’’. From the political economy view of tax nonlinearity, the tax policy under instability is expected to be both a self-confirming and a perfect insight majority rule equilibrium, Basándose en una función de bienestar social de Cobb-Douglas en términos de las utilidades de 2 generaciones concurrentes, este documento extrae una norma sobre tipos de interés, que es eficiente conforme a Pareto, libre de conflictos, y equitativa, sustentada por una norma de retroalimentación de los impuestos no lineales en caso de alteración del equilibrio. La fiscalidad de los jóvenes se utiliza como subsidio para los mayores, esperándose este mismo tratamiento cuando dichos jóvenes envejezcan; por tanto, la política fiscal tiene tanta importancia como la política monetaria para «los mismos». El énfasis sobre la política monetaria radica más bien en el hecho de que una vez que se altera el statu quo de equilibrio de una política que se acomoda a un programa de tipos de interés unidos a subsidios fiscales, la «parte de tipos de interés» seguirá siendo una elección de política prudente solo si se manipula la «parte de subsidios fiscales». Desde la óptica de la economía política de la no linealidad fiscal,es probable que la política fiscal en condiciones de inestabilidad constituya tanto un equilibrio de la norma mayoritaria autoverificativo como de percepción perfecta

When a lengthy book is widely discussed in academic circles and the popular media, it is probably inevitable that the arguments of the book will be simplified in the telling and retelling. In the case of my book Capital in the Twenty-First Century (2014), a common simplification of the main theme is that because the rate of return on capital r exceeds the growth rate of the economy g, the inequality of wealth is destined to increase indefinitely over time. In my view, the magnitude of the gap between r and g is indeed one of the important forces that can explain historical magnitudes and variations in wealth inequality. However, I do not view r > g as the only or even the primary tool for considering changes in income and wealth in the 20th century, or for forecasting the path of income and wealth inequality in the 21st century. In this essay, I will take up several themes from my book that have perhaps become attenuated or garbled in the ongoing discussions of the book, and will seek to re-explain and re-frame these themes. First, I stress the key role played in my book by the interaction between beliefs systems, institutions, and the dynamics of inequality. Second, I briefly describe my multidimensional approach to the history of capital and inequality. Third, I review the relationship and differing causes between wealth inequality and income inequality. Fourth, I turn to the specific role of r > g in the dynamics of wealth inequality: specifically, a larger r − g gap will amplify the steady-state inequality of a wealth distribution that arises out of a given mixture of shocks. Fifth, I consider some of the scenarios that affect how r − g might evolve in the 21st century, including rising international tax competition, a growth slowdown, and differential access by the wealthy to higher returns on capital. Finally, I seek to clarify what is distinctive in my historical and political economy approach to institutions and inequality dynamics, and the complementarity with other approaches.

We study a labor market with finitely many heterogeneous workers and firms to illustrate the decentralized (myopic) blocking dynamics in two-sided one-to-one matching markets with continuous side payments (assignment problems, Shapley and Shubik [24]). Assuming individual rationality, a labor market is unstable if there is at least one blocking pair, that is, a worker and a firm who would prefer to be matched to each other in order to obtain higher payoffs than the payoffs they obtain by being matched to their current partners. A blocking path is a sequence of outcomes (specifying matchings and payoffs) such that each outcome is obtained from the previous one by satisfying a blocking pair (i.e., by matching the two blocking agents and assigning new payoffs to them that are higher than the ones they received before). We are interested in the question if starting from any (unstable) individually rational outcome, there always exists a blocking path that will lead to a stable outcome. In contrast to discrete versions of the model (i.e., for marriage markets, one-to-one matching, or discretized assignment problems), the existence of blocking paths to stability cannot always be guaranteed. We identify a necessary and sufficient condition for an assignment problem (the existence of a stable outcome such that all matched agents receive positive payoffs) to guarantee the existence of paths to stability and show how to construct such a path whenever this is possible.

We examine the relationship between capitalism and income inequality for a large sample of countries using an adjusted economic freedom index as proxy for capitalism. Our results suggest that there is no robust relationship between economic freedom and Gini coefficients based on gross income. Subsequently, we analyse the relationship between income redistribution and ethno-linguistic fractionalisation. We find that the impact of ethno-linguistic fractionalisation on income redistribution is conditional on the level of economic freedom: countries that have a high degree of fractionalisation redistribute income less, while capitalist countries that have a low degree of fractionalisation redistribute income more.

Many real matching markets are subject to distributional constraints. These constraints often take the form of restrictions on the numbers of agents on one side of the market matched to certain subsets on the other side. Real-life examples include restrictions on regions in medical matching, academic master's programs in graduate admission, and state-financed seats for college admission. Motivated by these markets, we study design of matching mechanisms under distributional constraints. We show that existing matching mechanisms suffer from inefficiency and instability, and propose a mechanism that is better in terms of efficiency, stability, and incentives while respecting the distributional constraints. (JEL C70, D61, D63)

A strong association between incomes across generations—with children from poor families likely to be poor as adults—is frequently considered an indicator of insufficient equality of opportunity. Studies of such “intergenerational persistence,” or lack of intergenerational mobility, measure the strength of the relationship between parents’ socio-economic status and that of their children as adults. However, the association between equality of opportunity and common measures of intergenerational persistence is not as clear-cut as is often assumed. To aid interpretation researchers often compare measures across time and space but must recognize that reliable measurement requires overcoming important data and methodological difficulties.

Since the early 1990s, the human security movement has sought to expand the concept of security beyond the traditional military defense of national borders to focus on the intra-state security needs of populations at the individual level. Specific initiatives frequently address problems of population health, ethnic conflict, religious extremism, human rights, environmental or natural disasters, and other critical issues. For expatriate human security workers in the field, the environment may present meaningful challenges to their wellbeing and productivity. This can be especially so for those who have relatively more experience in academic, business, or administrative settings, and less in the field. The authors' goal is to illuminate practices that have demonstrated their efficacy in enhancing wellness, sustainment, and productivity for human security and other humanitarian and development workers deployed to austere environments. The content represents a synoptic consensus of best general practices and guidance from a range of resources comprising United Nations agencies and activities, national and international non-governmental organizations (NGO's), private volunteer organ­izations (PVO's), national military services, and international business concerns.

Economists have long been drawn to the ambitious quest of discovering the general laws of capitalism. David Ricardo, for example, predicted that capital accumulation would terminate in economic stagnation and inequality as a greater and greater share of national income accrued to landowners. Karl Marx followed him by forecasting the inevitable immiseration of the proletariat. Thomas Piketty’s (2014) tome, Capital in the Twenty-First Century, emulates Marx in his title, his style of exposition, and his critique of the capitalist system. Piketty is after general laws that will demystify our modern economy and elucidate the inherent problems of the system—and point to solutions. But the quest for general laws of capitalism is misguided because it ignores the key forces shaping how an economy functions: the endogenous evolution of technology and of the institutions and the political equilibrium that influence not only technology but also how markets function and how the gains from various different economic arrangements are distributed. Despite his erudition, ambition, and creativity, Marx was led astray because of his disregard of these forces. The same is true of Piketty’s sweeping account of inequality in capitalist economies. In the next section, we review Marx’s conceptualization of capitalism and some of his general laws. We then turn to Piketty’s approach to capitalism and his general laws. We will point to various problems in Piketty’s interpretation of the economic relationships underpinning inequality, but the most important shortcoming is that

We measure the general redistributive effect inthe Mexican fiscal system and its northern border with two decomposition approaches.The novelty of thisapplication lies inthe use of non-parametric techniques andthe fact that we did not assumeany functional relationship amongthe variables in analysis.Our papercontributeswith an assessment ofthenew 2014 fiscal reform according to the Value Added Tax (VAT) and its effects on the households.Atax-benefitsystemwith relativeprogressivitybut high HI effectis found as well as an increase on tax revenuesup to4percentof GDPfrom VAT in the border as well. Our analytical method to decompose the total progressivity measured by the contributions of different tax sourcesfrom VAT, allow us to conclude which sort of products should or should not be taxed with the general rate.

Since the early 2000s, research by Thomas Piketty, Emmanuel Saez, and their coauthors has revolutionized our understanding of income and wealth inequality. In this paper, I highlight some of the key empirical facts from this research and comment on how they relate to macroeconomics and to economic theory more generally. One of the key links between data and theory is the Pareto distribution. The paper describes simple mechanisms that give rise to Pareto distributions for income and wealth and considers the economic forces that influence top inequality over time and across countries. For example, it is in this context that the role of the famous r – g expression is best understood.

The aim of this paper is to propose a model of fiscal equalization in Croatia. This paper tests the hypothesis of a lack of effectiveness of the existing fiscal equalization model compared to a model that would be based on alleviating the difference in the potential to collect revenue from the personal income tax and surtax. Fiscal inequalities of local government units are determined first under the current equalization system by calculating the Gini coefficients and graphically presented with Lorenz curves. Thereafter, a distribution of equalization grants is simulated based on the new (proposed) model. The effectiveness of the proposed model in alleviating the fiscal inequalities is determined in relation to the effectiveness of the current equalization system. It was found that the model based on equalizing the difference in the capacity to collect revenue from the personal income tax and surtax alleviates inequalities in fiscal capacities of local government units much better than the existing system at the same cost. The main conclusion is that the fiscal equalization in Croatia should urgently be redesigned in order to improve efficiency and fairness, but also the transparency and credibility of the equalization system.

Happiness is increasingly named as a target of policy measures. Apart from the confusing fact that the attention-grabbing catchword ‘happiness’ refers to ‘life satisfaction’ in most cases, this approach appears preferable to alternatives as utility functions, magic polygons or to the opaque decisions of politicians. A life-satisfaction-oriented policy would prove welfare-improving, focusing on fair distribution of income and wealth, social goals and institutional goals such as health, freedom and social capital. However, these advantages would come at a price: medium-term life satisfaction goals would clash with longer-term aspects resulting from behaviour which is not aimed at sustainability, yet has a direct impact on it. The second problem is that the respondents can misjudge the satisfaction resulting from their choices, and may not be aware of the (longer-term) consequences of their decisions. Furthermore, policy cannot control some of the central elements of life satisfaction, which means that citizens will sooner or later discover that policy cannot live up to its promise. ‘Happiness’ as a policy goal cannot relieve politicians from constantly assessing trade-offs and sustainability and searching for compromises among the conflicting ideological positions.

What are the ethical implications of our contributions to global warming on an individual level? In his extended essay, John Broome analyzes the moral implications of our imposing damages on future generations through our greenhouse-gas emissions. He argues that we as individuals owe restitution to those who are in the future damaged by these unjust acts. He suggests that restitution can be accomplished by completely offsetting emissions and thereby having a zero carbon footprint. This review examines the force of his arguments and suggests that offsetting emissions on an individual basis is an imperfect substitute for collective action or more encompassing contributions to those hurt by our externalities. (JEL D63, Q21, Q54, Q58)

This paper proposes a method to quantify the contribution of inequalities of opportunities and inequalities due to differences in effort to be in good health to overall health inequality. It examines three alternative specifications of legitimate and illegitimate inequalities drawing on Roemer, Barry and Swift’s considerations of circumstances and effort. The issue at stake is how to treat the correlation between circumstances and effort. Using a representative French health survey undertaken in 2006 and partly designed for this purpose, and the natural decomposition of the variance, the contribution of circumstances to inequalities in self-assessed health only differs of a few percentage points according to the approach. The same applies for the contribution of effort which represents at most 8%, while circumstances can account for up to 46%. The remaining part is due to the impact of age and sex.

While there is now something of a consensus in the literature on the economics of happiness that income comparisons to others help determine subjective wellbeing, debate continues over the relative importance of own and reference-group income, in particular in research on the Easterlin paradox. The variety of results in this domain have produced some scepticism regarding happiness analysis, and in particular with respect to the measurement of reference-group income. We here use data from an original Internet survey in Japan to compare the results from happiness regressions to those from hypothetical-choice experiments. The trade-off between own and others' income (showing the importance of absolute and relative income) is similar in these two sets of results. This kind of validation of experienced utility via direct comparison with decision utility remains rare in this literature.

When studying attitudes towards redistribution, surveys show that individuals do care about fairness. They also show that the cultural environment in which people grow up affects their preferences about redistribution. In this article we include these two components of the demand for redistribution in order to develop a mechanism for the cultural transmission of the concern for fairness. The preferences of the young are partially shaped through the observation and imitation of others' choices. More specifically, observing during childhood how adults have collectively failed to implement fair redistributive policies lowers the concern during adulthood for fairness or the moral cost of not supporting fair taxation. Based on this mechanism, the model exhibits a multiplicity of history-dependent stationary states that may account for the huge and persistent differences in redistribution observed between Europe and the United States. It also explains why immigrants from countries with a preference for greater redistribution continue to support higher redistribution in their destination country.

We suggest an alternative way to construct a family of indices of socioeconomic inequality of health. Our indices belong to the broad category of linear indices. In contrast to rank-dependent indices, which are defined in terms of the ranks of the socioeconomic variable and the levels of the health variable, our indices are based on the levels of both the socioeconomic and the health variable. We also indicate how the indices can be modified in order to introduce sensitivity to inequality in the socioeconomic distribution and to inequality in the health distribution. As an empirical illustration, we make a comparative study of the relation between income and well-being in 16 European countries using data from the Survey of Health, Ageing and Retirement in Europe (SHARE) Wave 4.

Which preference underlies giving in dictator games? To date, the experimental evidence has either been interpreted as a preference over the distribution of payoffs, or as an experimenter demand effect. We show that under strict dictator-dictator as well as strict dictator-recipient anonymity, giving in dictator games springs from a preference over the distribution of decision rights. In contrast, concerns which trigger experimenter demand (Andreoni and Bernheim 2009) are negatively correlated with dictator game giving. Our experiments cover a series of dictator game variants which have sparked the experimenter demand debate. In addition, we identify the sets of ethical ideals that dictators employ to derive the 'right' course of action in a formal moral judgement test and model dictator transfers econometrically by means of dictators' actual ethical ideals. Our results explain the lion's share of results from the literature: lower transfers when dictators earn the pie (Cherry et al. 2002); lower transfers when 'take' options are available (List 2007; Bardsley 2008); lower transfers when anonymity is lifted (Hoffmann et al. 1994); generous dictators consistently preferring to avoid the game altogether, if given the option (Lazear et al. 2012), and findings that social norms and beliefs cause dictator transfers (Krupka and Weber 2013; Di Tella et al. 2015; Kimbrough and Vostroknutov 2015).

This paper aims to quantify and compare inequalities of opportunity in health across European countries considering two alternative normative ways of treating the correlation between effort, as measured by lifestyles, and circumstances, as measured by parental and childhood characteristics, championed by Brian Barry and John Roemer. This study relies on regression analysis and proposed several measures of inequality of opportunities. Data from the Retrospective Survey of SHARELIFE, which focuses on life histories of European people aged 50 and over, are used. In Europe at the whole, inequalities in opportunities stand for almost 50% of the health inequality due to circumstances and efforts in Barry scenario and 57.5% in Roemer scenario. The comparison of the magnitude of inequalities of opportunity in health across European countries shows considerable inequalities in Austria, France, Spain, Germany, whereas Sweden, Poland, Belgium, the Netherlands and Switzerland present the lowest inequalities of opportunities. The normative principle on the way to treat the correlation between circumstances and effort makes little difference in Spain, Austria, Greece, France, Czech Republic, Sweden and Switzerland whereas it would matter the most in Belgium, the Netherlands, Italy, Germany, Poland and Denmark. In most countries, inequalities of opportunity in health are mainly driven by social background affecting adult health directly, and so would require policies compensating for poorer initial conditions. On the other hand, our results suggest a strong social and family determinism of lifestyles in Belgium, the Netherlands, Italy, Germany, Poland and Denmark, which emphasises the importance of inequalities of opportunities in health within those countries and calls for targeted prevention policies.

Social planners in most western countries will be facing two long-lasting challenges in the next years: energy transition and fiscal consolidation. One problem is that governments might consider that implementing an energy transition could get in the way of achieving a fiscal consolidation. If so, interrupting the energy transition in a time of fiscal consolidation would involve significant aggregate impacts on activity and intergenerational redistributive effects. This article tries to assess them empirically. It relies on an overlapping-generations framework in a general equilibrium setting, with a detailed energy module. The model is parameterized on data provided by OECD/IEA for France. Different results emerge. Renouncing to the energy transition would slightly foster the level of GDP during the next 10 to 15 years - depending on the dynamics of the prices of fossil fuels on world markets - but weigh on it more significantly afterwards (up to -1% in 2050). If the prices of fossil fuels keep increasing in the future, implementing an energy transition could have broadly the same favourable effects on the GDP level in the long run as those of a fiscal consolidation diminishing significantly public spending instead of raising taxes. In the long-run, the GDP would be maximized by implementing an energy transition and simultaneously lessening the public deficit by lowering some public expenditure, a policy that would entail an overall gain of around 1,6% of GDP in 2050. Stopping the energy transition would also bring about intergenerational issues. It would be detrimental to the intertemporal wellbeing of almost all cohorts alive in 2010. A fiscal policy with lower public expenditures and frozen tax rates may be still more favourable to young and future generations than implementing an energy transition. However, renouncing to an energy transition would annihilate most of these pro-youth effects.

Estimating the effect of inequality on crime is challenging due to reverse causality and omitted variable bias. This paper addresses these concerns by exploiting the fact that, as suggested by recent scholarly research, the legacy of slavery is largely manifested in persistent levels of economic inequality. Municipality-level economic inequality in Colombia is instrumented with a census-based measure of the proportion of slaves before the abolition of slavery in the nineteenth century. It is found that inequality increases both property crime and violent crime. The estimates are robust to including traditional determinants of crime (like population density, proportion of young males, average education level, quality of law enforcement institutions, and overall economic activity), as well as geographic characteristics that may be correlated with both the slave economy and with crime, and current ethnic differences. Policies aiming at reducing structural crime should focus on reducing economic inequality.

This paper is devoted to the discussion of empirical findings related to research on the measurement of human development, inequality, and poverty. It is divided into three main sections. In the first of these three sections, we discuss some practical concerns raised about the Human Development Index and how these concerns have been empirically addressed. In the second of these sections, we discuss various empirical studies and findings relating to the level of human development and the level of inequality in human development. Finally, we discuss the empirical research and findings relating to multidimensional poverty.

We propose a new criterion reflecting both the concern for rights and the concern for welfare in the evaluation of economic development paths. The concern for rights is captured by a pre-ordering over combinations of thresholds corresponding to floors or ceilings on various quantitative indicators. The resulting constraints on actions and on levels of state variables are interpreted as minimal rights to be guaranteed to all generations, for intergenerational equity purposes. The level of these rights are endogenously chosen, accounting for the “cost in terms of welfare” of granting them. Such a criterion could embody the idea of sustainable development. We provide an axiomatization of such a criterion and characterize the tension between rights and welfare in a general economic framework. We apply the criterion to the standard Dasgupta–Heal–Solow model of resource extraction and capital accumulation. We show that if the weight given to rights in the criterion is sufficiently high, the optimal solution is on the threshold possibility frontier. The development path is then “driven” by the rights. In particular, if a minimal consumption is considered as a right, constant consumption can be optimal even with a positive utility discount rate. In this case, the shadow value of the right plays an important role in the determination of the rate of discount to be applied to social investment projects., Les auteurs proposent un nouveau critère reflétant à la fois le souci des droits et le souci du bien-être dans l’évaluation des sentiers de développement économique. La préoccupation pour les droits est saisie par une structure de préférences envers des combinaisons de seuils de divers indicateurs quantitatifs. Les contraintes sont interprétées comme des droits minimaux à garantir à toutes les générations. Les niveaux de ces droits sont choisis de façon endogène, en tenant compte du coût en termes de bien-être. Un tel critère pourrait incarner l’idée du développement durable. La tension entre droits et bien-être est caractérisée dans un cadre économique général. Les auteursappliquent le critère au modèle de Dasgupta-Heal-Solow. Ils montrent que si le poids accordé aux droits dans le critère est suffisamment élevé, la solution optimale se situe sur la frontière des seuils. Le chemin de développement est alors « piloté » par les droits. Plus précisément, si une consommation minimale est considérée comme un droit, la consommation constante peut être optimale même avec un taux d’actualisation positif. Dans ce cas, la valeur implicite du droit joue un rôle important dans la détermination du taux d’actualisation à appliquer aux projets d’investissement social.

In this paper we consider a sequential allocation problem with n individuals. The first individual can consume any amount of some endowment leaving the remaining for the second individual, and so on. Motivated by the limitations associated with the cooperative or non-cooperative solutions we propose a new approach. We establish some axioms that should be satisfied, representativeness, impartiality, etc. The result is a unique asymptotic allocation rule. It is shown for n=2,3,4, and a claim is made for general n. We show that it satisfies a set of desirable properties.