Academic journal article Journal of Markets & Morality

Social Choice in Five Dimensions

Academic journal article Journal of Markets & Morality

Social Choice in Five Dimensions

Article excerpt

The choice of social welfare function is the benchmark for the moral success or failure of economic policies. Yet most analysis of government policy making assumes that there is universal agreement regarding the society for whom welfare is to be maximized. This article argues that policy makers need to examine government policies through five dimensions of social choice: horizontal utility, vertical utility, group utility, generational utility, and universal utility. The two key issues that must be examined are who counts and over what time frame. In this article, the authors demonstrate that changing the definition of society over time and space dramatically changes the choice of moral economic policies. From a biblical perspective, Christians are commanded to make choices consistent with loving their neighbor as themselves while treating everyone in the world, both now and in the future, as their neighbor. 

Introduction

Most advocates of public policy, economists included, freely make normative moral claims that their desired policies make society "better off." However, the formal study of welfare economics has declined even as these normative claims have increased. (1) Policy makers seem unwilling, or unable, to precisely define the social welfare function that a perceived benevolent dictator is supposed to maximize. The dilemma they face is that model specification opens up two problematic doors. The first is that the social welfare function is formed by moral claims. To state the moral basis for a social welfare function is to argue that it is the moral basis for policy. In a pluralistic world, policy makers often shy away from making absolute moral claims. Those who do make moral claims are quickly challenged by those whose moral code differs from that of the policy maker. Policy makers rarely cite the moral foundations of their policies because there is no universal agreement on the moral social welfare function.

The second problematic door opened by social welfare function specification is that it creates the ability to objectively measure the policy's effectiveness. Policy makers may find an appeal in relating to an abstract morality of making society better off without having to face the burden of actually proving that said policy they are proposing actually does so. While public choice theory may shed light on why policy advocates prefer ambiguous appeals to morality, it leaves unanswered the most fundamental question: "Why should a particular public policy be implemented?" This article lays out commonly used social welfare functions and then demonstrates that changing the definition of society over time and space dramatically alters the moral implications of economic policies. It concludes by suggesting that the Christian faith requires believers to act in a way consistent with loving their neighbor as themselves while treating everyone in the world, both now and in the future, as their neighbor.

Popular Social Welfare Functions

Social welfare functions can be either microeconomic or macroeconomic in nature. In microeconomic functions, the individual is the basis for analysis, and society is the aggregation of individuals. Vilfredo Pareto, Jeremy Bentham, and John Rawls all put forth micro-based utility functions.

As interpersonal utility is impossible to accurately measure, a Pareto improvement is the only irrefutable way to increase social welfare. A Pareto improvement occurs if at least one person is made better off by an event without anyone else being made worse off. (2)

Jeremy Bentham's utilitarian social welfare function aggregates the utility of each individual (i) in society: (3)

(1) Social Welfare = [n.summation over (i=1)] [u.sub.i] where n equals the number of individuals in society

The utilitarian social welfare function places no importance on individual rights.

John Rawls suggests that social welfare is merely the utility of the person with the least utility in the society: (4)

(2) Social Welfare = min ([u. …

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