Which economy is best? (Part 3)

[hmkpoker]

Earlier threads here. and here.


Assume that utility can be objectively measured, accurately. In the first situation, two fictional nations have their levels of utility measured by the top economic minds. They break the society into deciles based on the amount of personal utility that they have access to, and record the data in "utility points." The populations are identical in size, and the economic types (capitalist, socialist, communist, etc) are not mentioned.

The blue nation has a completely equal utility distribution. The red nation varies. It's lowest decile is less than the lowest decile of the blue, it's second lowest is equal, and everything after that is higher.

Which is best?


In the second situation, all deciles of the red nation are higher than all deciles of the blue nation. The blue nation maintains an equal but lower distribution of utility.

Which is best?

[malorum]

In terms of applying the felicitous calculus of course suugests that we aim for the greatest happiness for the most people. That is the cumulative total utility for the society is what matters according to this model.

If you ask me which is "better", I'd need to know what you mean. Am I to imagine myself as:

a) a secretary of homeland securtiy seeking to avoid riots?
b) a communist party peoples representative. trying to promote party ideals
c) a theologian trying to apply my interpretation of scripture to say what is better.
d) a pro poker player.
e) the really happy guys and gals at the top of the red society.

b) would probably pick blue for both
d) red perhaps.

Can't answer the question unless you tell me what you mean by better and for whom.

[Propertarian]

I don't know why anybody would pick the blue state in option two. Everyone is worse off. I don't even think people who would favor completely equal income (if such a person exists) would pick it; they support equality of income because they think it would improve people's lives.

Even option one is unlikely to appeal to more than 1/10 people.

[DcifrThs]

can't answer the question b/c you've asked which "economy" is better and provided utility of citizens.

you're making a leap in measing economic performance/judgement by happiness of it's citizens.

Red can be a better economy or blue can be a better economy in terms of output/production.

if you make the assumption that each additional unit of output is tied to some level of utility for each decile and inter decile ties are identical then sure, utility can measure output... you are measing economy "bestedness" by the happiness of its people. this may be straightforward but you should outline it.

anyways, going on what you posted...

situation 1:

Total utility of Red (assume 1 person per decile)=

sum(i=1-10)10*i=550. 550/10=55utility units per person.

Total utility of blue (assume 1person per decile)=

20units of utilty per decile*10total number of deciles=200

200total utility/10total people in economy= 20units of utility per person.

situation 1: red>blue by 2.75 times.

__________________________________________________ _______


situation 2:

Total utility of Red (assume 1 person per decile)=

sum(i=0-9)20+10i=550. 650/10=65utility units per person.

Total utility of blue (assume 1person per decile)=

10units of utilty per decile*10total number of deciles=100

100total utility/10total people in economy= 10units of utility per person.

situation 2: red>blue by 6.5 times.




this analysis assumes transference of utility. total utility, where utility gained by one person and lost by another is equal, remains the same.

Barron

[hmkpoker]

[ QUOTE ]
I don't know why anybody would pick the blue state in option two. Everyone is worse off. I don't even think people who would favor a completely equal income (if such a person exists) would pick it; they support equality of income because they think it would improve people's lives.

Even option one is unlikely to appeal to more than 1/10 people.

[/ QUOTE ]

Exactly. The only case where you're worse off in option one is if you're a very, very small percentage of the population. After that, the benefits skyrocket.

You can contrast this with the situation from the first of these threads here, where most people demonstrated preference for the similarly equal but lower total distribution of utility (nation 1) than the higher total and higher disparity of utility of nation 2. The example is basically the same as it is in this situation, but to a lesser degree (the differences in this one are far more pronounced).

John Rawls suggested that people are naturally risk averse, and it is better to have a society with less intra-economic variance even at the expense of total wealth, as that better reflects the people's best interest. It's sort of like buying insurance. However, one has to ask to what degree are we willing to sacrifice EV for variance? At some point (like in situation one), there is something obviously wrong with cutting off almost two thirds of the total utility just to insure that everyone is free from falling into lowest decile.

No policy can ever stop EVERYONE from falling through the cracks. There are homeless people in Sweden (although there are far fewer there than in America). There's only so much intervention and redistribution one can take before you start impoverishing the country. How does one go about figuring out the break-point, just how much egalitarianism is good, and how much is crippling?

Situation two is just my morbid curiousity [img]/images/graemlins/tongue.gif[/img]

[madnak]

[ QUOTE ]
Situation two is just my morbid curiousity [img]/images/graemlins/tongue.gif[/img]

[/ QUOTE ]

It's too bad moorobot's gone...

[soon2bepro]

[ QUOTE ]
Can't answer the question unless you tell me what you mean by better and for whom.

[/ QUOTE ]

QFT

[hmkpoker]

[ QUOTE ]
[ QUOTE ]
Situation two is just my morbid curiousity [img]/images/graemlins/tongue.gif[/img]

[/ QUOTE ]

It's too bad moorobot's gone...

[/ QUOTE ]

Utility = equality! It doesn't matter if the tribe is starving together in their mud-huts as they scrounge for roots and berries, as long as they are all starving equally.

[hmkpoker]

[ QUOTE ]
Can't answer the question unless you tell me what you mean by better and for whom.

[/ QUOTE ]

Neither can economists.

[Propertarian]

[ QUOTE ]
John Rawls suggested that people are naturally risk averse, and it is better to have a society with less intra-economic variance even at the expense of total wealth, as that better reflects the people's best interest. It's sort of like buying insurance. However, one has to ask to what degree are we willing to sacrifice EV for variance? At some point (like in situation one), there is something obviously wrong with cutting off almost two thirds of the total utility just to insure that everyone is free from falling into lowest decile.


[/ QUOTE ] Prioritarianism and sufficentarianism are contemporary variants of utilitarianism that evolved out of the debate between Rawlsians and utilitarians, and I'm one of the people that think priority and sufficency of utility are both > than equality or aggregation of utility.

However, I think people have oversimplified Rawls's view here-it's ok because it lead to these great new ideas.

And yes, where one draws the line is extremely difficult to tell in this situation. I think this is one of those situations where our philosophy can rule out certain options, but won't necessarily allow us to determine which option is the very best with much certainity or precision.