1188 Jack Knetsch, and Richard Thaler 1986); res- olution of social choice problems such as locating nuclear-waste facilities (Felix Oberholzer-Gee, Iris Bohnet, and Bruno Frey 1997); public-utility regulation (Edward Zajac 1985); and labor unemployment due to efficiency wages (e.g., George Akerloff and Janet Yellen 1990). The view that “By now we have substantial evidence suggesting that fairness motives affect the behavior of many people” (Ernst Fehr and Klaus Schmidt 1999) is expressed in mainstream economics. This contrasts with the traditional belief of many economists that justice is chimerical or amorphous. A more sympathetic stance placed it outside the domain of economics, better left to philosophers, political scientists, or sociologists. There has been a steady trend, however, of increasing interest in and acceptance of justice in the economics pro- fession, even partially displacing efficiency. 2 This is not to say, of course, that economists are or should be abandoning their traditional 2 This is suggested, for example, by an examination of studies documented on EconLit. The number of entries for the 1970s under the keyword “efficiency” outnumber those under “justice” or “fairness” (not counting those under the equivocal term “equity”) by sixteen to one. For the 1980s this ratio falls to about nine to one, and for the 1990s this gap further narrows to 4.4 to one. In fact, if one considers entries under the JEL classification system in operation since 1991 through the present, hits under the code closest to justice (D63: Equity, Justice, Inequality, and Other Normative Criteria and Measurement) outnumber those under that closest to efficiency (D61: Allocative Efficiency; Cost-Benefit Analysis) almost two to one. 1 Loyola Marymount University. I thank the editor and three anonymous referees of the Journal of Economic Literature; Alison Alter, Gary Bolton, John Coleman, Gary Charness, James Devine, Jon Elster, Duncan Foley, Simon Gächter, Wulf Gaertner, Guillermina Jasso, Serge- Christophe Kolm, Alexander Kritikos, Axel Ockenfels, Joe Oppenheimer, Richard Posner, Matthew Rabin, Erik Schokkaert, John T. Scott, Alois Stutzer, Peyton Young, Ed Zajac, and participants at the meetings of the Public Choice Society, Social Choice and Welfare Society, and International Society for Justice Research for many help- ful suggestions and comments. Any remaining errors or shortcomings are, of course, my own. I also thank Jack Knetsch for permission to use questions from Kahneman, Knetsch, and Thaler (1986). Journal of Economic Literature Vol. XLI (December 2003) pp. 1188–1239 Which Is the Fairest One of All? A Positive Analysis of Justice Theories JAMES KONOW 1 N o man during, either the whole of his life, or that of any considerable part of it, ever trod steadily and uniformly in the path … of justice, … whose conduct was not principally directed by a regard to the sentiments of the supposed impartial spectator, of the great inmate of the breast, the great judge and arbiter of conduct. – Adam Smith (1759) p. 357 1. Introduction Justice arguments are now widely invoked to improve theoretical and empirical analysis in nearly every field of economics. Incorporated into game theory (e.g., Matthew Rabin 1993), fairness predicts the deviations from pure self-interest observed in many laboratory experiments (e.g., Werner Güth and Reinhard Tietz 1990). Its impact has also been cited in many real-world con- texts, including the intermittent failure of product markets to clear (Daniel Kahneman,
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1188
Jack Knetsch, and Richard Thaler 1986); res-olution of social choice problems such aslocating nuclear-waste facilities (FelixOberholzer-Gee, Iris Bohnet, and BrunoFrey 1997); public-utility regulation (EdwardZajac 1985); and labor unemployment due toefficiency wages (e.g., George Akerloff andJanet Yellen 1990). The view that By now wehave substantial evidence suggesting thatfairness motives affect the behavior of manypeople (Ernst Fehr and Klaus Schmidt1999) is expressed in mainstream economics.This contrasts with the traditional belief ofmany economists that justice is chimerical oramorphous. A more sympathetic stanceplaced it outside the domain of economics,better left to philosophers, political scientists,or sociologists. There has been a steadytrend, however, of increasing interest in andacceptance of justice in the economics pro-fession, even partially displacing efficiency.2
This is not to say, of course, that economistsare or should be abandoning their traditional
2 This is suggested, for example, by an examination ofstudies documented on EconLit. The number of entries forthe 1970s under the keyword efficiency outnumber thoseunder justice or fairness (not counting those under theequivocal term equity) by sixteen to one. For the 1980sthis ratio falls to about nine to one, and for the 1990s thisgap further narrows to 4.4 to one. In fact, if one considersentries under the JEL classification system in operationsince 1991 through the present, hits under the code closestto justice (D63: Equity, Justice, Inequality, and OtherNormative Criteria and Measurement) outnumber thoseunder that closest to efficiency (D61: Allocative Efficiency;Cost-Benefit Analysis) almost two to one.
1 Loyola Marymount University. I thank the editor andthree anonymous referees of the Journal of EconomicLiterature; Alison Alter, Gary Bolton, John Coleman, GaryCharness, James Devine, Jon Elster, Duncan Foley, SimonGchter, Wulf Gaertner, Guillermina Jasso, Serge-Christophe Kolm, Alexander Kritikos, Axel Ockenfels, JoeOppenheimer, Richard Posner, Matthew Rabin, ErikSchokkaert, John T. Scott, Alois Stutzer, Peyton Young, EdZajac, and participants at the meetings of the PublicChoice Society, Social Choice and Welfare Society, andInternational Society for Justice Research for many help-ful suggestions and comments. Any remaining errors orshortcomings are, of course, my own. I also thank JackKnetsch for permission to use questions from Kahneman,Knetsch, and Thaler (1986).
Journal of Economic Literature Vol. XLI (December 2003) pp. 11881239
Which Is the Fairest One of All? A Positive Analysis of Justice Theories
JAMES KONOW1
No man during, either the whole of his life, orthat of any considerable part of it, ever trodsteadily and uniformly in the path of justice, whose conduct was not principally directedby a regard to the sentiments of the supposedimpartial spectator, of the great inmate of thebreast, the great judge and arbiter of conduct. Adam Smith (1759) p. 357
1. Introduction
Justice arguments are now widely invokedto improve theoretical and empirical analysisin nearly every field of economics.Incorporated into game theory (e.g.,Matthew Rabin 1993), fairness predicts thedeviations from pure self-interest observed inmany laboratory experiments (e.g., WernerGth and Reinhard Tietz 1990). Its impacthas also been cited in many real-world con-texts, including the intermittent failure ofproduct markets to clear (Daniel Kahneman,
Konow: A Positive Analysis of Justice Theories 1189
3 There are, however, excellent surveys on more narrowtopics from which this paper has also profited, e.g.,Bernard Cullen (1994) reviews normative philosophicaltheories and Erik Schokkaert (1994) normative economictheories.
interest in efficiency. Instead, stimulated byempirical evidence and, perhaps, the percep-tion of increasing economic inequality, theyare expanding their studies to encompass awider set of distributive concerns. Despitethe emerging consensus in economics overthe relevance of fairness, though, no suchagreement yet exists among economists or,for that matter, among psychologists, politicalscientists, sociologists, or philosophers, aboutthe proper theory of justice.
1.1 Two Goals of the Study
One goal of this paper is to conduct a posi-tive analysis of leading positive and normativetheories of justice, where a remarkable lacunaexists in the literature.3 By positive analysis Imean that each theory, whether originallyconceived for this purpose or not, will beevaluated in terms of how accurately itdescribes the fairness preferences of people.In this paper, the terms fairness, justice, andequity always refer to the view of AdamSmiths impartial spectator whose judgment isnot biased by any personal stake. The discus-sion includes both distributive justice, whichconcerns fair outcomes, as well as proceduraljustice, which addresses fair processes,whereby the more extensive treatment of theformer reflects the relative emphasis in thejustice literature. Justice is operationalizedhere mostly in relation to material wealth, thechief concern of most economists, eventhough it is clear that the forces discussedoften impact noneconomic domains. Otherfactors that affect allocations include altruism,reciprocity, spite, kinship, and friendship.These are significant but distinct phenomena,which nevertheless underscore the importand timeliness of studying justice, given grow-ing evidence that some behavior previouslyattributed to these forces (especially reciproc-ity) is likely due to distributive preferences.
A second, closely related goal of the paperis to propose and defend an integrated justicetheory that synthesizes previous approachesand explains actual values as the conflation offour distinct forces or elements. These ele-ments of justice inspire four correspondingtheoretical categories (or families) into whicheach of the theories is placed and analyzed.The category equality and need covers theo-ries that incorporate a concern for the well-being of the least well-off members of socie-ty including egalitarianism, social contracttheories (chiefly Rawls), and Marxism. Theyinspire the Need Principle, which calls forthe equal satisfaction of basic needs. Theutilitarianism and welfare economics familycomprises utilitarianism, Pareto Principles,and the absence of envy concept, which havegrown out of consequentialist ethics, or thetradition in philosophy and economics thatemphasizes consequences and end-states.They are most closely associated with theEfficiency Principle, which advocates maxi-mizing surplus. The category equity anddesert includes equity theory, desert theory,and Robert Nozicks theory. Together theyinform the Equity Principle, which is basedon proportionality and individual responsibil-ity. The context family discusses the ideas ofKahneman, Knetsch, and Thaler; MichaelWalzer; Jon Elster; H. Peyton Young; andBruno Frey and Alois Stutzer, among others.This fourth family does not generate a dis-tributive principle but rather deals with thedependence of justice evaluation on the con-text, such as the choice of persons and vari-ables, framing effects, and issues of process.4
4 When dealing with such an extensive literature, even awide-ranging review cannot be comprehensive. Although Ihave striven to include the most influential theories of jus-tice, some theories are omitted because they are not pri-marily theories of justice (e.g., game theories), or becausetheir focus is more remote from the subject matter of eco-nomics (e.g., juridical theories), or because their incorpo-ration into the four elements that frame the study seemsforced (rights theories). Actually, the paper seeks to repre-sent the breadth of the literature in a relatively concisemanner by treating many theories while focusing on thoseaspects of each that contribute to the integrated theory.
1190 Journal of Economic Literature, Vol. XLI (December 2003)
While proceeding through the sometimesintricate analysis that follows, the reader canbetter maintain a sense of unity if he or shekeeps in mind the dual goals of this paper andthe framework that structures them. On theone hand, the specific theories discussedoffer very different, and sometimes contra-dictory, perspectives on the meaning of jus-tice. On the other hand, I argue for a generaltheory of justice as a unifying framework forthe specific theories. These ostensibly disso-nant objectives are reconciled by the follow-ing two facts. First, the general theory guidesthe classification of a specific theory into thecategory (i.e., element of the general theory)that is judged as most helpful for distilling thespecific theorys most salient contribution tounderstanding actual justice views.Nevertheless, the evidence, taken as a whole,does not confirm any single theory in toto andsometimes even refutes central suppositionsor conclusions. Both favorable and unfavor-able evidence on the specific theories, how-ever, produces lessons for the general theory.Second, it should be emphasized that thegeneral framework around which the analysisis organized is an integrated theory, but not acomposite theory: justice is more than thesum of its parts. The three principles of jus-tice must be weighted, and context providesthe weighting scheme in specific cases. Theargument is that each category captures anelement that is important to crafting a posi-tive theory of justice but that no single familyor theory within a family suffices to this end.Instead, fairness views are best explained byan integrated approach that acknowledgesthe influence of the three principles of jus-tice, whereby the weight on each is deter-mined by the context. This method enablesone to treat justice rigorously and to reconcileresults that often appear contradictory or atodds with alternative theories.
1.2 Reasons for this Research Agenda
Related Documents
