Priority for the Worse Off and the Social Cost of Carbon

The social cost of carbon (SCC) is a monetary measure of the harms from carbon emission. Specifically, it is the reduction in current consumption that produces a loss in social welfare equivalent to that caused by the emission of a ton of CO2. The standard approach is to calculate the SCC using a discounted-utilitarian social welfare function (SWF)—one that simply adds up the well-being numbers (utilities) of individuals, as discounted by a weighting factor that decreases with time. The discounted-utilitarian SWF has been criticized both for ignoring the distribution of well-being, and for including an arbitrary preference for earlier generations. Here, we use a prioritarian SWF, with no time-discount factor, to calculate the SCC in the integrated assessment model RICE. Prioritarianism is a well-developed concept in ethics and theoretical welfare economics, but has been, thus far, little used in climate scholarship. The core idea is to give greater weight to well-being changes affecting worse off individuals. We find substantial differences between the discounted-utilitarian and non-discounted prioritarian SCC

Equality of Opportunity versus Equality of Opportunity Sets

We characterize two different approaches to the idea of equality of opportunity. Roemer’s social ordering is motivated by a concern to compensate for the effects of certain (non-responsibility) factors on outcomes. Van de gaer’s social ordering is concerned with the equalization of the opportunity sets to which people have access. We show how different invariance axioms open the possibility to go beyond the simple additive specification implied by both rules. This offers scope for a broader interpretation of responsibility-sensitive egalitarianism

A comparison of optimal tax policies when compensation or responsibility matter

This paper examines optimal redistribution in a model with high and low-skilled individuals with heterogeneous tastes for labor, that either work or not. With such double heterogeneity, it is well known that traditional Utilitarian and Welfarist criteria suffer serious flaws. As a response, several other criteria have been proposed in the literature. We compare the extent to which optimal policies based on different normative criteria obey the principles of compensation (for differential skills) and responsibility (for preferences for labor). Unsurprisingly, the criteria from the social choice literature perform better in this regard than the traditional criteria, both in first and second best. More importantly, these equality of opportunity criteria push the second best policy away from an Earned Income Tax Credit and in the direction of a Negative Income tax