Baron, J. (1993). Heuristics and biases in equity judgments: a
utilitarian approach. In B. A. Mellers and J. Baron (Eds.),
Psychological perspectives on justice: Theory and
applications, pp. 109-137. New York: Cambridge University
Heuristics and biases in equity judgments: a utilitarian
Human judgments and decisions have been compared to normative
models that specify how judgments and decisions should be made.
Such comparisons often find discrepancies between people's goals
and the decisions meant to achieve those goals. These
discrepancies are often called `biases,' and the informal ways of
thinking that lead to them are called `heuristics.' Evidence of
biases is useful because we can often find ways of teaching
people better ways of thinking, better heuristics, or we can
learn when we need to work around the biases by using more formal
methods of analysis. In these ways, the discovery of human error
leads to ways to improve the human condition.
In this chapter, I shall apply this comparative approach to the
study of equity judgments. Of course, even the earliest studies
of equity judgments were implicitly concerned with criticizing
and improving them. However, by making the interest in criticism
more explicit than previous writers, I am forced also to be more
explicit about the normative theory to which the judgments are
compared. The normative theory I shall defend is utilitarianism,
the view that the best decision is the one that maximizes
expected utility over all who are affected. I take `utility' to
be the extent to which goals are achieved in fact. Utility in
this sense need not be the same as utility as expressed in
decisions or judgments, which usually involve implicit
predictions of utility in my sense (Kahneman & Snell, 1990).
Utilitarianism has been criticized over the last two centuries
for leading to conclusions that seem unjust. For example, it can
permit hurting people who are already unfortunate if the benefit
to those who are more fortunate is sufficiently great. Most
modern philosophers (e.g., MacIntyre, 1984; Sen & Williams, 1982;
Williams, 1985) think that these kinds of criticisms have stuck.
On the other hand, economists and other social scientists (e.g.,
Landes & Posner, 1987; Shavell, 1987) often accept some form of
utilitarianism. Some philosophers (e.g., Hare, 1981; Singer,
1979) think that recent, more carefully developed, forms of
utilitarianism can answer the criticisms, so that the theory now
represents the most defensible and complete normative approach to
questions of policy as well as individual moral decision making.
In general, these writers deal with apparent counterexamples by
either reinterpreting them as consistent with a more thorough
utilitarian analysis (e.g., Singer, 1977) or arguing that a
generally good intuitive principle (e.g., `do no harm') is being
overgeneralized. The latter reply challenges the critics to
provide some other justification than their intuitive judgment
about what is just. So far, the critics have not met this
challenge and have, instead, retained a degree of faith in human
intuition that recent psychological findings (reviewed by Baron,
1988a) would lead us to question.
If utilitarianism is the correct normative theory, the exercise
of asking where our judgments differ from utilitarianism tells us
where our judgments are in need of improvement (if improvement is
possible). If, on the other hand, the critics are correct, then
this exercise tells us why our judgments - correct or not - could
fail to bring about the best consequences in the utilitarian
sense. This sort of knowledge will at least help utilitarians
understand our current situation.
In this chapter, I shall outline the implications of
utilitarianism for equity judgments. Although I shall sketch
some arguments that might be made for it, I cannot provide a
complete defense here. (See Baron, in press, and Hare, 1981, for
that.) Then, I shall discuss some apparent departures of
decisions and judgment from these implications. These are the
purported biases. At the end, I shall discuss the implications
of these biases for public policy.
Utilitarianism is a normative theory - a standard for evaluating
our decisions - not necessarily a prescriptive theory - a set of
practical guidelines (Baron, 1985). It need not apply to
everyday judgments such as how to treat a student who asks for an
extension on an assignment. Such judgments are typically made on
the basis of intuitions - moral heuristics, as it were - or fixed
rules, such as, `No extensions, because they are unfair to those
who need them and don't request them.' In general, we feel that
these intuitions and rules are morally right, and we tend to feel
guilty when we go against them, even when we know that they are
normatively wrong. These intuitions and rules constitute our
`naive theories' of morality (in the sense of McCloskey, 1983,
We might maximize utility better by using our naive theories even
if they disagree with the results of our best effort to maximize
utility in a given case (Hare, 1981). Certainly, if I considered
every student who asks for an extension in great detail, I would
find a few who seem to deserve it. But I could be wrong: for
example, I could misestimate probabilities. I might make fewer
mistakes in the long run to say, `no extensions, period,' than to
try to pick out those deserving cases. To paraphrase the late
Hillel Einhorn, I must accept error to avoid more error. In some
cases, then, following strict rules is a better way to maximize
utility than trying to maximize utility. In other cases, though,
our naive theories might not maximize utility. We might do
better by trying, or by using different naive theories or
Equity judgments are often based on these kinds of intuitions or
naive theories. In showing that these judgments depart from the
normative standard, we must not jump to the conclusion that they
should not be used. Instead, we are led to ask whether any
alternative set of intuitions or ways of making judgments can
bring us closer to the normative model. Often, the answer to
this question will be affirmative, but we cannot assume that it
is in all cases. In this sense, showing that something is
non-normative makes only a prima facie case that it is
irrational. The rest of the case involves showing that a better
way can be found.
Department of Psychology
University of Pennsylvania
Utilitarianism as normative theory
Utilitarianism is about choosing best options. It allows us to
evaluate one option against another. It ignores whether one is
an `action' and the other an `inaction.' It holds that decisions
should be made on the basis of future differences between
outcomes of different options. The past is relevant only if it
affects the future. For example, the existence of an agreement
(a past event) sets up a situation in which violation of the
agreement sets a precedent (in the future) for other violations.
Utilitarianism often conflicts with our intuitive beliefs about
what is morally right. This is, indeed, the main phenomenon I
shall discuss. Other moral theories are often defended on the
basis of appeal to intuitions (or the systematization of
intuitions, as in Rawls, 1971). Most utilitarians cannot accept
this approach, because it puts us in danger of begging the
question by confirming our present moral beliefs. To think about
moral theory, we must put aside our present moral intuitions so
that we can question them. We must find some other way to
justify moral conclusions aside from appeal to our own prior
My own approach to justification (Baron, in press) argues that
the best moral principles are those that we would each have
reason to endorse for others to follow for the sake of the
achievement of our nonmoral goals. (The limitation to nonmoral
goals avoids begging the question.) These principles must be
impartial across people, so that we can endorse them convincingly
for others. The goals that we already have give us our only
reasons to endorse these principles. We do not need the
intuitive moral beliefs that we have put aside. The best
principle for us to endorse consistently, in order to achieve our
goals as well as possible, is that everyone should act so as to
maximize the achievement of everyone's goals, i.e., maximize
total utility. By endorsing this principle, we are acting to
insure the achievement of our own goals as well as the goals of
An important difference between utilitarianism and other theories
is its reliance on interpersonal comparison of utility.
Utilitarianism assumes that consequences can be evaluated and
that differences in consequences can be compared, ideally if not
in practice. In some simple cases, we have two options. One
option is better for one person and the other option is better
for another person. For example, a couple is trying to decide
whether to go to a movie or a play. The husband wants the movie,
and the wife wants the play. To make an interpersonal
comparison, we must compare the utility differences for each
person. Hare (1981) suggests that we do this by imagining that
the decision were being made by a single person who had all the
goals of both the husband and wife. If the wife prefers the play
strongly - so that the difference is large for her - and the
husband prefers the movie only weakly - so that the difference is
small for him - then the couple does better on the whole to go to
the play. The utility loss to the husband (relative to the
movie) is smaller than the utility gain to the wife (relative to
The ability to make such comparisons requires understanding of
the goals of other people and willingness to put aside one's own
goals for the purpose of achieving such understanding. These
conditions are often absent in adversarial situations such as
simple bargaining (with mediation or arbitration).
More generally, utilitarianism assumes that we can make judgments
of whether a loss (or forgone gain) for one or more people is
compensated by a gain (or forgone loss) for one or more others.
If we judge that a loss is compensated, then we can justify the
loss by pointing to this judgment: `Yes, by choosing this option,
I hurt you, but I would hurt others more if I chose the
alternative.' (Of course, the judgment can be challenged.) This
kind of comparison of losses and gains can be used to define the
utility scale itself (Hare, 1981, ch. 7.3), thus avoiding the
problems of inferring utility from preferences among gambles
faced by individuals (Weymark, 1991).
Importantly, any theory that leads to different conclusions
cannot always appeal to this justification in terms of comparison
of relative harm. It must sometimes countenance harm to some
(relative to other options) without compensating gain for
others. (Examples are given later.) Various principles are
often invoked for this purpose, such as rights, fairness,
retribution, honor, and so on. But these principles cannot
derive their authority from any considerations of consequences
for the achievement of people's goals. Compared to the
utilitarian decision, any other theory yields decisions that
achieve people's goals less well.
Several competing theories try to do without interpersonal
comparisons. For example, some conceptions of economic
efficiency rely on Pareto optimality. By this criterion, a
situation is optimal if it is impossible to improve matters for
one person without making matters worse for someone else. Notice
that, in our example, both the movie and the play could be Pareto
Sometimes this principle is used in a way that puts the burden of
proof on the side against the status quo. If the couple had
`planned' to go to the movie, then, by this rule, it would be
wrong to change the plan because the change would make matters
worse for the husband. This rule creates a bias toward inaction,
even when action could increase total utility. Here, the past,
the prior plan, is affecting the outcome in ways that need not be
relevant to future effects on goal achievement. Nozick (1974)
seems to endorse such a principle.
Another competing theory, proposed by Kaldor (1939) and Hicks
(1939) holds that a change is optimal if the winners could
compensate the losers so that nobody loses. This rule does not
lead to a bias toward inaction. But it does not require the
compensation to be provided, so it could make things worse. If
the wife very much wants something that the husband could easily
provide (agreement to go to dinner at a certain restaurant that
the husband likes too), so that she might accept it as
compensation for attending the movie, then, by this rule, the
couple should go to the movie, even if the husband does not in
fact provide the compensation.
These competing theories often start from the assumption that
interpersonal comparison is impossible or impractical. Although
it is indeed impractical in many cases, its theoretical
possibility has been defended (Hare, 1981; Griffin, 1986; Baron,
1988b, 1991). What matters is not whether it is easy to do, but
rather whether it makes sense for us to try to do it. When we
try to compare one person's gain with another's, does it make
sense to say that we are accurate or inaccurate in this judgment?
In many cases, it clearly does make sense. For example, certain
medical policies, such as vaccination, will hurt a few (who get
serious side effects) to help many others. In such cases, we can
think of the desires of the `typical person' affected by such a
policy. If some of the people affected happen to be `utility
monsters,' with utilities 100 times as sensitive to different
outcomes as those of other people, we do not know who these
monsters are. If each person has an equal chance of being such a
monster, then the conclusion that we should base our judgment on
the typical person is unaffected (on the basis of expected
In other cases, we must consider differences in tastes. Although
this is more difficult, we do know something about the
development of tastes, and the errors in our knowledge are as
likely to be in one direction as in another (if we are unbiased),
so we are better off trying to apply what we know than ignoring
it. In the extreme, if identical twins have identical
experiences, then we can be sure that their utility functions are
the same. (If we can't be sure of this, then we are slipping
into a kind of skepticism that would make all normative inquiry
impossible.) If we know something about the effects of
experience on desires, we can adjust for differences in
experiences. Perhaps genetic differences do make people
differentially sensitive to certain experiences. In the absence
of understanding of such effects, however, the earlier argument
about utility monsters applies, and we can neglect genetic
differences on the grounds that they are as likely to go one way
as another, and we can take a probability-weighted average of all
their possible effects.
Interpersonal comparison is not a proof procedure designed to
beat down alternative theories. We can usually imagine a set of
utility functions that yields decisions compatible with any
alternative theory. These functions need not be the ones we
would arrive at, however, if we focus our attention on the
question of what achieves the goals of those affected.
Utilitarianism tells us what to attend to when trying to make
difficult judgments as best we can, not how to justify judgments
we have already made.
Issues in the application of utilitarianism
Although the basic principle of utilitarianism can easily be
stated while standing on one foot, applications require a number
of intermediate devices. This section reviews a few of the more
Declining marginal utility vs. incentive
In general, the utility of one additional unit of a good, e.g., a
dollar or an apple, becomes smaller the more units one has
already. We say that `marginal utility' declines. This is
because goods are essentially means to the achievement of more
fundamental goals. We use money, for example, to buy food, and
we use food to nourish ourselves. Money is a flexible good, in
that we can use it to satisfy many different goals. If we are
poor, we use money to satisfy only the goals that can be most
easily satisfied with money, such as food and shelter. If we are
rich, additional spending to achieve these goals has little
effect, and we try to find other ways to spend money to achieve
our goals, but these are bound to be less efficient uses of
money, for we have already done the things that money can do most
Declining marginal utility is an important utilitarian
justification for provision of compensation for injury, whether
the compensation comes from personal insurance, social insurance,
or liability law. If you suffer a loss that can be made up with
money (such as a house fire), then you can obtain greater utility
from money than you could before the loss. (You can rebuild.)
If utility is marginally declining and insurance is `actuarily
fair' (i.e., the insurer makes no long-run profit), then you
maximize utility by insuring yourself fully against the loss.
This principle does not necessarily apply when losses cannot be
replaced with money or goods. Unless the death of one's child
increases one's marginal utility for money, compensation for such
a death is not justified (Friedman, 1982). Penalties for death
caused negligence are justified by the need to deter negligence,
but the penalty need not, in principle, be paid to the victim or
the victim's parents. This is nonintuitive, as are many
conclusions derived from utilitarianism. But, in fact, people do
not generally buy life insurance on their children.
Because the marginal utility of money (and other goods) is
usually declining, we can generally increase total utility by
taking from the rich and giving the same amount to the poor,
other things equal. The poor can make use of money to achieve
their goals more easily. Of course, other things are not equal.
But this argument pushes us toward equal division of goods.
One utilitarian argument against equal division is that goods can
be used as rewards and punishments. The market rewards those who
produce goods and services that others want. The availability of
this reward causes people to try to provide goods and services
that others want. Similarly, we can penalize people for behavior
that we want to discourage. I mean `reward' and `punishment' in
the general sense of anything that affects the frequencies of
certain behavior, if only through expressing consistency with
avowed social norms.
The principle of declining marginal utility and the principle of
incentive are the major utilitarian considerations in allocating
goods (including money), e.g., through wages or taxation. If
taxation is not progressive enough, then the poor will suffer too
much; matters would be better on the whole if we took more from
the rich and less from the poor. If, on the other hand, taxation
is too progressive (so that, for example, everyone received the
same after-tax income), incentive to produce would be reduced too
much; matters would be better on the whole to allow some
inequality. Some optimal balance can usually be found, but the
correct distribution of goods need not follow any simple rule.
Research is required to study both the utility of money for
different groups and the incentive effects of extra income. From
a utilitarian perspective, rules such as `to each according to
her contribution' or `to each the same' are at best crude
approximations to an optimum. When the relevant data are not
worth collecting, however, use of such rules may be the best we
The deterrence principle is the major utilitarian justification
of punishment, including criminal law and tort law. Punishment
is a harm, and it therefore must be justified by compensating
gains. For utilitarians, two wrongs do not make a right, unless
the second wrong prevents even greater wrongs in the future. In
some cases, deterrence is optimal if an injurer is required to
compensate the victim fully for a loss (Landes & Posner, 1987;
Shavell, 1987). In other cases, additional `punitive' penalties
are justified (e.g., if the offense is difficult to detect). It
might make sense to make someone who kills a child negligently
pay a penalty - as deterrence - even if does not make sense to
give that penalty to the child's parents. For utilitarians,
compensation and deterrence are not necessarily linked, although
for practical purposes it might make sense to link them.2
Competing theories (e.g., Rawls, 1971; Cohen, 1989) often make
some sort of distinction between different kinds of goods. The
idea is that equalization should apply mainly to certain goods,
such as adequate nutrition, medical care, educational
opportunity, opportunity to compete for positions, and
opportunity to participate politically. Other goods - such as
expensive cars, vacation homes, pornographic movies, or, more
generally, the things that people spend their money on once they
have satisfied their basic `needs' should be left to the
incentive system, if anywhere.
Utilitarianism does not begin with any distinction of this sort,
but a similar distinction can be derived from the competing
principles of incentive and declining marginal utility. Both
sorts of goods achieve people's goals. The principle of
declining marginal utility says that, other things equal, we
should try to eliminate discrepancies in all of these things. A
progressive income tax could still be justified even in a world
in which everyone's basic needs were completely satisfied and
money was spent only on luxuries. But in the real world, this
principle alone gives us no particular reason to equate the
distribution of basic needs rather than the money that people
could use to satisfy them or to achieve any other goals.
But goods in the first category - the basic needs - allow people
to take part most effectively in a competition based on
incentive. Efforts to equate the distribution of these goods -
beyond simply giving people the money to pay for them - increase
the general effectiveness of an incentive system. (I assume that
the effectiveness of money spent on these goods at making people
sensitive to incentive is also marginally declining.) People who
are poorly educated, in poor health, or malnourished, cannot be
induced to contribute much even by fairly heavy incentives.
Their production is therefore lost to the rest of us. So we have
additional reason to equate these basic goods, aside from the
fact that people want them very badly.
Moreover, some of the `luxuries' (e.g., pornography, or buying
gas guzzlers) that people pursue with wealth derive from goals
that people should be discouraged from developing, because they
impair the achievement of other people's goals more than most
goals do. We might tolerate some of these goals by allowing them
as part of an incentive system, but we surely do not want to
encourage them by making them part of a system of basic
Although utilitarianism presupposes equal consideration of
everyone, it is, in another sense, not a theory of justice at
all, for it tries to subsume all other considerations of justice
under other headings. In doing this, it can account for some of
the intuitions about justice that inspire competing theories.
A second utilitarian argument against equal division of all goods
is the existence of individual tastes. If I like apples and you
like oranges, it is better for me to get more of the apples and
you to get more of the oranges. The market, as an institution,
allows us to satisfy our individual tastes, insofar as we can
Envy and comparison
Certain emotions are connected with distributions, particularly
envy, a desire that those who are perceived as coming out ahead
unjustly should suffer (Sabini & Silver, 1982; Elster, 1989).
Envy is most likely to arise when the comparison between self and
others is clear, and this is most likely to happen when people
are near each other, working together, in the same family, and so
Envy can be an unpleasant consequence of decisions about
distribution. It must therefore be included in the evaluation of
options. One way to avoid envy is to use simple rules of equal
division, or any rules that everyone agrees should be used.
Another way is to teach people not to be envious, as traditional
Christianity has tried to do.
We often find decision makers paying careful attention to equity
within their groups, ignoring gross inequity between members of
different groups. Reduction of envy is a possible justification
of such concerns.
Another possible justification of such concern is that many goods
are evaluated through comparison to the goods possessed by others
(Sen, 1987). Clothing, automobiles, and houses are, for many
people, valued to the extent to which they are up to (or above)
the level of the owner's reference group. Lawyers must dress
like other lawyers, not like professors, so even a
public-interest lawyer needs a collection of suits. People might
be able to overcome such comparative evaluation, just as they can
overcome envy, but, until they do, it is a relevant concern.
Many have argued that certain goals, such as those resulting from
envy, should be ignored in a utilitarian calculus. I shall not
assume this, for these goals are real.3 However, ignoring envy might be one way to teach people
not to be envious. If it is, then we might well be justified in
ignoring envy in our decisions.
In the second grade, my son was given a story of the `fair
bears,' who went out to collect berries. The baby collected the
most berries, the (large) father the next most, and the mother
the least. All three worked equally hard. The children were
asked how the bears should divide up the berries.
Clearly, this is one of several episodes of the same type. The
bears have probably worked out a system, and, in the long run, a
great variety of systems could be approximately optimal from a
utilitarian point of view. My own answer is `not enough
information given.' (If it were people and not bears, I might be
able to make some reasonable guesses about what had happened
before.) If the bears expected to keep the berries that each of
them collected, then it would seem unfair to divide the berries
equally. Likewise, if they expected to divide the berries
equally, it would seem unfair to keep what was found.
Expectations have a role in utilitarian theory. They coordinate
social interaction, and their violation weakens the general trust
that people have in them, forcing people to take precautions
against their violation by others. It does not matter much
whether we drive on the left or right side of the road, provided
that we all drive on the same side. If even a few people start
driving on the other side, then everyone must be extra cautious,
and this is costly. Likewise, people make plans based on
expectations of how goods will be distributed. They suffer if
they cannot make or carry out these plans. A non-optimal system
of distribution that fits everyone's expectations can be better
than an otherwise optimal system that is introduced unexpectedly,
without giving people adequate time to modify their plans.
Here is a story based on Foot (1978): Five people are in a
hospital, dying. One can be saved only by a kidney transplant,
another by a heart transplant, another by a brain transplant,
etc. They are all young and will lead full lives if they are
saved. But no donors are available. Then, one day, Harry
wanders into the emergency room to ask directions...
So the question for a utilitarian is, why not? The answer could
be that this is one of those cases in which our intuitions are
wrong, so that Harry really ought to be sacrificed, although a
good person would not do it.
Another answer is that Harry, and all of us, have a right not to
be sacrificed in this way. But what is a right and where does it
come from? A possible utilitarian answer is that a right is a
social rule that saves people certain costs of worry and
protective behavior. If Harry were sacrificed, we would all have
to take precautions against being sacrificed for the benefit of
others. We would also worry about it. In the end, the sacrifice
might not be justified in utilitarian terms.
More generally, many rights can be seen as social institutions or
norms that are reliably enforced, so that people can depend on
certain things not happening to them. If rights are violated,
people have to change their plans - taking steps to protect
themselves against things they thought they were protected
against - and they have something new to worry about. These
effects, although perhaps small, are spread over many
people, and they might therefore outweigh a substantial net good
that would be done otherwise.
In a utilitarian analysis, rights are never absolute. They can
always be outweighed. As a practical matter, though, our
judgments are prone to error, and we are properly suspicious of
those who lightly take it upon themselves to violate someone's
rights for someone else's imagined good. On the other hand, we
should also be suspicious of those who raise the banner of rights
on behalf of questionable practices. As Mill (1859) argued,
rights are worth enforcing because they serve a utilitarian
purpose. Some practices put forward as rights might not be
justifiable in terms of their consequences for goal achievement.
The need for adequate information
To test for anti-utilitarian biases, we need to provide subjects
with sufficient information so that utilitarianism provides an
answer to the question we ask. Many experiments in equity theory
are like the fair-bears story described above. Too little
information is given, and many different responses are
normatively reasonable. These experiments cannot tell us whether
anti-utilitarian biases exist. (Some of the experiments I
discuss can be faulted on these grounds too, but I include them
because I think that more information would not change the
results.) For example, Bar-Hillel and Yaari (1987) asked
subjects to divide a shipment of 12 grapefruits and 12 avocados
between Jones and Smith. Jones derives 100 mg of `vitamin F'
from each grapefruit, and Smith derives 50 mg from each
grapefruit and from each avocado. Smith and Jones are interested
only in vitamin F.
A utilitarian would need to make some explicit assumptions about
each person's utility function for vitamin F. If utility were
linear with vitamin F, then Jones should get all the grapefruit
and Smith, the avocados. But if the minimum requirement for
staying alive were 800 mg from this shipment, or if envy were a
strong consideration, then Smith should get four of the
grapefruit too. (This solution, which also equated the amount of
vitamin F for Smith and Jones, was preferred by most subjects.)
If utility functions were marginally declining and similar for
both people, the optimal solution would be somewhere in this
interval. The utilitarian solution is even less clear in several
variants of the basic cases, e.g., those in which the subject is
told only Smith's and Jones's beliefs about their ability to
extract vitamin F, with their true ability unstated.
When relevant information about utility functions is withheld, we
can learn about the heuristics that subjects use in the absence
of such information. We cannot tell whether subjects regard
these heuristics as sufficient even when the relevant information
is provided. True, subjects rarely complain about the lack of
information, but they are not usually asked whether they think
the information is adequate, and they have come to expect
psychologists to require judgments to be based on minimal cues.
In the rest of the paper, I shall argue that many people have
nonutilitarian intuitions about equity. Moreover, their
heuristics have, in many cases, solidified into moral intuitions
that are resistant to counterargument. People are not at all
monolithic in these intuitions. Many people do bring
utilitarian intuitions to bear on the same cases. All this makes
for lively disputes in debates about public policy.
Probability, ex-ante and ex-post
When no incentive effects are present, it seems equitable to
divide costs or risks equally among similar individuals, and this
is justified by declining marginal utility. But what seems
equitable before a risk is resolved (ex-ante) may not be
equitable afterwards (ex-post) (Keller & Sarin, 1988: Ulph,
1982). If I give each of my two nephews a lottery ticket, they
are both being treated equally. If one wins, the situation is
then unequal. But suppose that my only choices are to give ten
tickets to one nephew or one ticket to each. To get envy out of
the picture while they are waiting for the results of the draw,
suppose that neither nephew will ever know that I have given them
the tickets, and that, if one wins, he will simply be told that
someone gave him the winning ticket. Many people might still
think that it is wrong to give more tickets to one nephew. The
intuition that ex-ante equity is important in its own right
has inspired some (e.g., Sarin, 1985) to develop nonutilitarian
normative models of equity. (Note that ex-post equality is
supported by declining marginal utility. Utilitarianism
conflicts only with the intuition that ex-ante equity is
justified beyond its effect on ex-post equity.)
In the end, though, only one of them can win, and giving one of
them ten tickets makes such an event more likely. The expected
utility is greater for the unequal solution. The expected
achievement of my nephew's goals - and mine insofar as I care
about theirs - is greater with the unequal division. If I were
to choose one ticket for each, I must deprive one nephew of an
additional chance to win, and I could not justify this by saying
that I had given the other a compensating gain.
One possible utilitarian justification of ex-ante equality
is that equal division follows a good general rule, and breaking
this rule - even when doing so seems to maximize utility in a
given case - would weaken support for the rule, so that, in the
long run, the consequences would be worse. Notice that this
argument presupposes that people will not distinguish between
uses of the equality rule that do and do not maximize utility in
the specific case.
Another possible utilitarian justification is that arbitrary
ex-ante inequality - not justified by incentive - weakens or
dilutes the use of inequality of distribution for incentive. If
distribution of anything, risks included, is seen as arbitrary,
then people will not work so hard to gain benefits or avoid
It is also possible, though, that the equal-chance principle is
sometimes an overgeneralization, a true error. Chances to win
are not the same as winnings. An equal-division rule for
winnings is justified by the declining marginal utility of
winnings themselves. But the utility of chances to win is
not marginally declining. People still apply the equal division
rule because they do not know its justification.
Keller & Sarin (1988) gave subjects hypothetical options like the
Options 1 and 2 differ in ex ante equity, that is, equity
determined before the uncertainty is resolved. Option 2 differs
from option 3 in ex post equity, determined after the
uncertainty is resolved. Subjects preferred more equal
distributions in both kinds of situations, that is, Option 3 is
preferred to Option 2, and Option 2 is preferred to Option 1.
According to a simple utilitarian analysis, all three
options are equivalent. Emotional considerations could account
for the pattern of choices that subjects make, however: Option
2, compared to Option 1, leaves both potential victims with some
hope until the uncertainty is resolved. (On the other hand, a
50% chance of death may provoke more than half of the anxiety of
certain death, in which case Option 1 would be better.) Option 2
might seem worse than Option 3 because the person who lived might
grieve for the person who died in Option 2, and this could not
happen in Option 3.
For many cases of dispersed risk, however, these considerations
are irrelevant, or they work in the opposite direction. In the
case of small ex ante environmental risks from chemicals,
for example, doubling the risk level and halving the number of
people exposed would probably have little effect on the amount of
anxiety in each exposed person, so that it would, on the whole,
decrease anxiety (rather than increase it) by reducing the number
of people exposed. Likewise, most decisions about risk have no
effect on the amount of grief per death. This issue would arise
only if the risk were such as to annihilate a substantial portion
of some community.
Issues of equity in risk of discrete events such as death are
somewhat separate from equity issues involving money. The
utility of money is marginally declining. The utility of
probability of death is, normatively, linear with probability
(putting aside such issues as the effects of deaths on
communities, and assuming constant grief per death). Our
intuitions about equity in risk bearing - despite their strength
- are probably unjustifiable. If we must give up something in
order to follow them, then the intuitions themselves harm the
achievement of other goals. This may be happening in our
judgments about equality of ex-ante risk.
|Option 1: ||Person 1 dies. Person 2 lives.|
|Option 2: ||50% chance: Person 1 dies, Person 2 lives.|
|50% chance: Person 2 dies, Person 1 lives.|
|Option 3: ||50% chance: Person 1 dies, Person 2 dies.|
|50% chance: Person 1 lives, Person 2 lives.|
Punishment, deterrence, and compensation
To compare people's judgments to utilitarian theories of
punishment and compensation, Baron and Ritov (in preparation)
devised a questionnaire concerning liability law for medical
products. The questionnaire addressed, among other issues,
respondents' understanding of deterrence as a rationale for
penalties, and their understanding of the justification of
compensation. Respondents were told:
`Imagine that, a few years from now, the Unites States has a new
law concerning medical misfortunes, such as injuries or diseases.
According to this law, anyone who suffers such a misfortune can
request compensation from the government. This compensation is
in addition to medical expenses, which are paid out of universal
'If the misfortune might be caused by a medical product made
by a company, the person who suffered the misfortune can file a
complaint. For each complaint, two questions will be decided
separately, each by a different panel:
* One panel will decide whether the company will be fined, and,
if so, how much. All fines go to the government, not the injured
person. The panel that decides the fines considers only the
justice of imposing the fines. It ignores the needs of the
government for money, and it ignores how the money will be spent.
* The second panel will decide how much the injured person will
be compensated. If any compensation is paid, the government pays
it, not the company. This panel takes into account only the
situation of the injured person. It ignores the cost to the
government, and it ignores the responsibility of the government,
if any, for causing or preventing the misfortune.
`Compensation can be provided even if the company pays nothing,
and the company can be fined even if no compensation is provided.
The government does not have to break even in the long run.
'The panel that decides on compensation to the victim does not
know how much the company has been fined, if anything, and the
panel that decides on fines does not know how much compensation
has been given to the injured person.
`If the misfortune was not caused by a product, the
person who suffered the misfortune can still ask for
compensation. Only the second panel will hear the case.'
This situation allowed us to examine the determinants of
compensation and penalties separately.4
Two cases were then presented. In the first, a woman becomes
sterile as a result of taking a new (but well-tested)
birth-control pill. In the second, a child dies from a vaccine
against a disease that is far more likely to kill the child than
the vaccine is (based on real cases - see Inglehart, 1987). Each
case was followed by several questions, which were then compared
to each other. Questions were directed at both penalties and
compensation for the victim (the parents, in the case of the
child). Each question asked for a justification as well as a
We gave the questionnaire to members of Judicate, a group of
arbitrators who are mostly retired judges, a group of
environmental activists, a group of members of the American
Economic Association, and a group of undergraduate students, and
a few law students, 93 respondents in all. In general, the
groups did not differ greatly in their responses, and I shall not
discuss the group differences here.
Do people see deterrence or incentive - future consequences -
as a reason for increasing or decreasing penalties? One test
for this was the comparison of penalty judgments in questions in
which the penalty would bring about improved behavior (making a
safer product) vs. questions in which the penalty would bring
about a less desirable state (no product). For example, one
question stated, `The company knew how to make an even safer pill
but had decided against producing it because the company was not
sure that the safer pill would be profitable. If the company
were to stop making the pill that the woman took, it would make
the safer pill.' A matched question stated, `If the company
were to stop making the pill that the woman took, it would cease
making pills altogether.' Analyses are restricted to those
respondents who said that the company should pay some penalty in
the first question.
If respondents said that the company should be punished less in
the second question, then they were sensitive to the future
effects of the penalties. Out of 74 respondents who would fine
the company in one case or the other and who answered these
questions, 31% did think that the company should be punished less
in the second case in at least one of the two cases, and 4%
thought the company should be punished more.5 Most of the subjects who would
punish less in the second case explicitly mentioned incentive in
their justifications, but only one of the other subjects
mentioned it (arguing that incentive was optimal). Most
respondents did not seem to notice the incentive issue.
A second test for incentive was the question in which the penalty
would have no future effect at all because the the penalty was
secret (and those who would know were retiring) and, in any case,
the company was insured by a long-term policy with fixed rates.
`These two facts together mean that decisions about payment to
the government could have no effect on future decisions by this
company or other companies about which pills to produce.' This
stipulation ruled out any more general effect of fines on the
deterrence of future behavior, if subjects accepted it (and none
explicitly denied it as part of a deterrence rationale). Out of
72 respondents who penalized the company in one case or the other
and who answered this question, 24% did penalize the company less
in this question, and 10% penalized the company more. Again,
most respondents were not sensitive to incentive effects here.
Does compensation depend on the cause of the injury? In
each case, the particular injury (sterility, death of a child)
was held constant across the questions. Differences in the need
for penalties could not serve as a reason for differences in
compensation, because these two decisions were independent. We
examined three different factors that could affect compensation
in the absence of differences in the victim's need for
compensation: whether the injury was caused by an omission or a
commission; whether it was caused by nature or a company; and
whether the company that caused it was negligent. In the
negligence case, the company did not follow regulations in
producing the product, but the negligence itself did not lead to
the injury. Most analyses are restricted to those respondents
who thought that some compensation should be provided in the
In the omission questions, the company did not produce the
product in question, and the injury would not have occurred if
the company had produced it: the woman became sterile because she
took a different, more risky, pill; or the child died from the
flu. Out of the 63 respondents who compensated the victim in the
first question in at least one case and who answered this
question, 32% provided less compensation (in at least one case)
when the harm was caused by an omission and 2% provided more
compensation. The effect was found in both cases. (Arguably,
the victim should not have taken the risky pill, but the parents
had no choice.) People seem to feel that compensation should be
greater when injury is caused by an act than when it is caused by
an omission or by nature.
In other questions, the injury was simply caused by nature and
could not have been prevented. Out of 69 respondents who
provided compensation in at least one case and who answered the
questions about compensation for natural injuries, 58% provided
less compensation for natural injuries than those caused by a
company (in at least one case), 42% provided equal compensation
in both cases, and none provided more compensation for natural
injuries. People seem to feel that more compensation should be
provided for injuries caused by people than for those caused by
nature. This issue is discussed further below.
Finally, out of 76 respondents who provided compensation in at
least one case and who answered the questions about negligence,
13% provided more compensation when the company was negligent and
1% provided less compensation. Note, however, that the provision
of extra compensation did not help to punish the company, for
that was handled in the penalty question. In sum, people seem to
be influenced by nonutilitarian considerations having to do with
establishing some sort of balance between compensation and
penalty, as if the two could not be separated.
Does direct compensation have special status? In our cases,
penalties and compensation were determined separately and did not
have to be equal. Typically, however, injurers pay victims
directly. We thought that people might have a very basic
intuition about the need to `undo' a harm that would lead to
greater payment when the compensation was paid directly. In
other words, people might see the provision of compensation as
more than just the assessment of a penalty and the provision of
compensation. We tested this by asking how much compensation
should be provided to the victim if the injurer pays directly, in
the case in which the penalty was secret and the injurer was
Out of 83 respondents who answered the relevant question at least
once, 29% provided more compensation when the company paid the
victim directly and 5% provided less compensation. Moreover, 50%
of the 82 respondents who answered the relevant questions
provided more compensation here than when the injury was
naturally caused. Out of 79 subjects who answered all the
relevant questions, 28% showed both of these effects together and
only 1% showed the reverse effects (more compensation from nature
and less compensation with direct payment).
This pattern of responses cannot be justified in terms of
compensation or incentive. The need for compensation does not
change as a function of the direct payment. Incentive is absent
because of the insurance and the secrecy. We conclude, then,
that a substantial proportion of respondents are inclined to ask
injurers to pay more and victims to receive more when the payment
is direct, as it is in most cases in the real world. Such a
pattern of responding would lead to excessive use of the tort
system, compared to what could be justified by the functions of
compensation and deterrence.
More on personal vs. natural causation
In another study, not reported elsewhere, I examined a potential
alternative explanation of the finding that compensation was
greater when the injury was caused by people rather than by
nature. Specifically, victims might feel more emotionally upset
when their misfortune was caused by a person, thus needing extra
To test this, I asked subjects to decide on appropriate
compensation for victims of injuries. Subjects were told that
the victims never knew the cause of their accident and that the
injurers never knew the effect of their carelessness on the
victim (so they did not know about the compensation either). The
latter stipulation ruled out any possible deterrent effect of the
compensation provided. Thirty-two student subjects (paid for
their time) completed the questionnaire.
Subjects were told, `Imagine that you are the executor of the
estate of an eccentric multi-millionaire, whose estate is to be
used to compensate people who have suffered some misfortune. It
is your task to decide how much to compensate each person. The
highest award can be $100,000, but you should feel free to give
less if you want to save the money for more deserving cases.
'Please compare the cases in each group to each other. We are
interested in why you give different amounts to different cases
in each group, or why you give the same amounts, so please
provide brief explanations. We are not interested in the
absolute levels of compensation, so if you prefer simply to rank
the cases (including ties, if any), that is fine.
`When we do not provide details (such as the age of the people),
assume that you cannot take these details into account, or that
they are the same for all the cases within a group.
'Finally, please imagine that all these events occur in a country
in which lawsuits are prohibited. The compensation that you
award is therefore the only compensation that people can get for
their suffering, even when, in our country, they might be able to
sue. (They are, however, insured for their medical expenses.)`
In the first scenario, 'The people in this group have all
suffered a permanent back injury that causes severe pain when
they are engaged in strenuous activity. During the course of a
normal day they experience some pain in the back. In all cases,
the injury resulted from tripping over a rock lying on the
sidewalk.` In Case 1, the rock 'rolled onto the sidewalk from a
nearby hill, as a result of a rain storm.` In Cases 2 and 3, it
'rolled onto the sidewalk because a construction crew, which was
working on a nearby building, had violated safety rules for the
use of rocks in construction.` Cases 2 and 3 were distinguished
by whether those responsible for the violation were caught and
punished (Case 2) or not (Case 3). Greater compensation in Case
3 than in Case 2 would suggest that subjects applied an intuition
about retribution even when there was in fact no effect of the
compensation on the perpetrator.
The second scenario involved blindness from an infection caused
either by a mosquito bite, in Case 1, or by violation of sanitary
rules by the kitchen staff in a restaurant in Cases 2 and 3,
which were again distinguished by whether those responsible were
caught and punished. The third injury was loss of a job caused
either by normal business competition (Case 1) or by the unfair
and illegal practices of another business firm (Cases 2 and 3,
distinguished as before).
In each scenario, subjects were told that the victim did not know
the cause of his injury (e.g., 'The injured person never learned
how the rock got where it was`), and in each case with a
perpetrator they were reminded that the perpetrator did not know
that the injury had occurred (e.g., 'Those responsible ... did
not know about the injury`).
Table 1 shows the ranking patterns of the three cases within each
injury. Out of 32 subjects, 16 provided equal compensation for
all cases within each injury. Fifteen of the remaining 16
provided more compensation in Case 2 or Case 3, where
carelessness was to blame, than in Case 1, where nature was to
blame, in a majority of comparisons (p<.001 by a Wilcoxen test on
the number of scenarios per subject, for each comparison). Of
the subjects who compensated Cases 1 and 2 differently, 10 out of
12, 8 out of 10, and 11 out of 11 were in the predicted direction
for the three injuries, respectively. For Cases 1 and 3, the
analogous results were 11 out of 12, 8 out of 10, and 11 out of
Number of subjects who showed each pattern of ranking in the
experiment on compensation.
Back Blindness Job loss
3 > 2 > 1 2 0 2
2 > 3 > 1 1 1 1
1 > 3 > 2 0 1 0
3 > 1 > 2 1 0 0
2 = 3 > 1 7 7 8
3 > 1 = 2 1 1 0
1 > 2 = 3 1 1 0
1 = 2 = 3 19 21 21
Note: In case 1, the misfortune was caused by nature; in cases 2
and 3, it was caused by negligence. In case 2, those who were
negligent were caught and punished; in case 3, they were not.
Higher ranks reflect greater compensation.
There was no significant difference in the compensation provided
to Cases 2 and 3 (carelessness vs. accident). This result
conflicts, inexplicably, with the result of the last study, in
which compensation was greater when the company was negligent.
Apparently, that phenomenon is not robust.
Typical justifications of lower compensation in Case 1 were: 'In
Case 1, no compensation should be awarded because no one is at
fault. ... it was a freak of nature and no one is to blame.`
'Case 1 - lowest amount -> uncontrollable Natural Act -
unpreventable unless person themselves hadn't tripped.` 'Both
people in cases 2 & 3 are victims of people's carelessness so we
decide to give [them] more than case 1.` 'Case 1 should be
awarded $10,000 only, because the rock came loose because of
nature and it was inevitable that it would come apart.` 'Cases 2
& 3: A person eating in a restaurant should be able to assume
that the food will not make them blind, so [I] awarded these two
more than Case 1 where the blindness was from natural cause.`
One subject referred to victim incentive in the business
scenario: 'Case 1 should get less money because he could have
done something to contribute to the company going out of
This experiment indicates that the heuristic of providing less
compensation for misfortunes caused by nature than for those
caused by people is not dependent on subjects' beliefs about
victims' or injurers' knowledge or emotions. This
person-causation bias could lead to inequity in the provision of
compensation. We are more inclined to compensate those who are
injured by others than those who are victims of natural accidents
such as the unfortunate circumstances of their birth. Such
inequity is nonoptimal for maximizing utility because it leaves
some people uncompensated who could benefit greatly from a
relatively small amount of compensation, while those who are
injured by people sometimes get compensation that does them less
Inequity and change in public policy
Other equity biases often seem to inhibit reform. Most reforms
help some people and hurt others. For example, a higher tax on
gasoline in the U.S. will help the whole world by reducing
CO2 emissions, and it will help most Americans by reducing
traffic, pollution, and the budget deficit. But it will hurt
those few Americans who are highly dependent on gasoline, even
when we take the other benefits into account. Some of those who
would be hurt are poor, and would suffer considerably. Congress
might try to craft some sort of compensation for those who are
hurt, but it is difficult to target them accurately.
The problem of uncompensated harm arises in practically any sort
of reform in energy and environmental policy. The argument is
basically in the form of a heuristic rule or intuition, 'Don't
hurt people.` This argument has been made against increased
gasoline taxes. Very likely, the same argument will be raised
when other needed environmental reforms - such as those
occasioned by global warming or the population explosion - are
considered seriously. It is even made when the ultimate effect
is to reduce inequity: I once almost convinced someone that the
U.S. ought to abolish its sugar quotas in order to help the
impoverished families who work on sugar plantations in Jamaica
and the Philippines, until I mentioned that a much smaller number
of sugar workers in the U.S. would lose their jobs as a result of
such a move.
Most positions in public policy can be supported by some rational
argument, so we cannot simply write off the opponents of gasoline
taxes or supporters of sugar quotas as irrational. (For example,
it is possible that abolition of sugar quotas will not really
help the workers, although I suspect that those who say this have
no particular reason to believe it.) It is possible, however,
that part of the basis of their position is unjustifiable and
that, if this part were removed, many opponents of truly
beneficial reforms would not hold their position, or they would
not fight for it so strongly.
Opposition to reform on grounds of uncompensated harm alone is a
bias. Uncompensated harm is also caused by failure to make
reforms. If we do not raise the gasoline tax, then -
compared to the alternative at issue - more people will get
emphysema, more people will live in poverty as a result of
economic stagnation, etc. And if I am right that abolishing
sugar quotas will help many families in foreign countries, then
failure to abolish these quotas, relative to the alternative, is
hurting these people. We must decide which hurt is smaller.
What matters is the future achievement of goals, for that is what
our decision can affect. The status quo is normatively
irrelevant, as is the distinction between action and inaction.
In several studies (Spranca, Minsk, & Baron, 1991; Ritov & Baron,
1990, in press) my colleagues and I have demonstrated a bias
toward inaction, especially in cases in which both action and
inaction can cause some harm. I am suggesting here that this
bias tends to inhibit change in public policy because we attend
to changes rather than ultimate results, and we attend more to
harms than to benefits. When some people are hurt in order to
help others, we view the change as unfair, even if we would
prefer the result to the status quo if given a straightforward
choice between the two (with neither functioning as the status
Resistance to voting for coerced reform
Some evidence for such an effect comes from a study of Baron and
Jurney (1990). We presented subjects with six proposed reforms,
each involving some public coercion that would force people to
behave cooperatively, that is, in a way that would be best for
all if everyone behaved that way. The situations involved
abolition of TV advertising in political campaigns, compulsory
vaccination for a highly contagious flu, compulsory treatment for
a contagious bacterial disease, no-fault auto insurance (which
eliminates the right to sue), elimination of lawsuits against
obstetricians, and a uniform 100% tax on gasoline (to reduce
Most subjects thought that things would be better on the whole if
the reforms, as we described them, were put into effect, but many
of these subjects said that they would not vote for the
reforms. (A much smaller group of subjects made the opposite
kind of 'reversal,` in which they said that they would vote for a
proposal that they thought would make things worse.) A
status-quo effect was also found: subjects who thought that the
reforms were beneficial were less likely to vote to repeal the
reforms, once they were in effect, than comparable subjects were
to vote against the reforms at the outset.
Subjects who voted against proposals that they saw as
improvements cited several reasons (among a list of reasons that
we gave them). The following three reasons (shown in the form
used here in one of the studies) played a major role in such
resistance to reform, as indicated both by correlations with
resistance (among subjects who saw the proposals as improvements)
and by subjects indicating that these were reasons for their
Harm. 'The law [or rule] would make some group worse off than
they were before the law.`
Rights. 'The law would take away a choice that people ought to be
able to make.`
Fairness. 'The law would unfairly distribute the costs of the
change. That is, some people would suffer more than they should,
relative to other people.`
For example, in one study, 39% of subjects said they would vote
for a 100% tax on gasoline, but 48% of the non-voters
thought that the tax would do more good than harm on the whole.
Of those subjects who would vote against the tax despite thinking
that it would do more good than harm, 85% cited the unfairness of
the tax as a reason for voting against it, 75% cited the fact
that the tax would harm some people, and 35% cited the tax taking
away a choice that people should be able to make.
Unfairness was generally the most consistent of these reasons for
resistance, across different experiments and different cases.
This result provides some evidence for the role of equity
judgments in resistance to reform. Note that, in this study, we
deal with subjects who saw reform as an improvement in
utilitarian terms. We essentially asked subjects this directly.
Resistance to inequality: Experiment 1
To examine further the role of fairness and harm in policy
evaluation more quantitatively, I carried out two experiments
using hypothetical situations. The first experiment examined
tradeoffs between, on the one hand, the total gain or loss in
income of two groups, and, on the other hand, increases or
decreases in the inequality of outcome or in the change from the
Twenty-four paid subjects (students) were given a questionnaire,
which began, 'Imagine that you are the president of a small
island republic. You have the power to make treaties by
yourself. You are engaged in trade negotiations with your sole
trading partner, a much larger nation. Your entire economy is
dependent on agricultural exports. Crops are grown by small
farmers who own their own farms. Half are bean growers, and half
are wheat growers. Bean growers and wheat growers are equally
needy and equally deserving.
`Each of the following cases represents a final offer made by
your trading partner. For each offer, you are shown the present
average annual income of each group, and the income that would
result from accepting the offer. If you decline an offer, the
current situation will stay in effect for at least two years.
Please indicate whether you would accept each offer ('yes`) or
not ('no`). Feel free to comment on the reasons for your policy
in each part.'
Part A, with 21 cases, began with the following case:
The income of the wheat growers for `Accept' (underlined here but
not in the original) was incremented by $1,000 per case up to
Case 21, where it reached $40,000. Case 2 is therefore the first
case in which a net improvement is possible. Case 11 is the
first case in which no harm is done to the wheat growers by
accepting. The critical measure here is the minimum income of
wheat growers at which the subject accepts the offer, minus
$20,000. We can think of this net gain (roughly) as the minimum
that the subject is willing to accept to give up equity (WTA).
In Part B, with 11 cases, the first case was:
|1. ||Income of ||Income of|
|bean growers ||wheat growers|
|Decline ||$30,000 ||$30,000|
|Accept ||$40,000 ||$20,000|
The income of wheat growers for Decline (underlined here)
was incremented in $1,000 steps until it reached $30,000 in Case
11. Case 1 entails no net loss. The remaining cases entail
greater net loss for removing less initial inequality. Notice
that Part B is identical to Cases 1-11 in Part A, except that the
`Decline' and `Accept' are reversed. At issue here is the
highest income of wheat growers, minus $20,000, at which the
subject accepts the offer. We can think of this net loss as the
maximum that the subject is willing to pay for equity (WTP).
In Parts A and B, one of the options is always equality of
income. The value of such equality is therefore confounded with
the value of equality or inequality in the change from the
status-quo that results from accepting an offer. Parts C and D
were identical to Parts A and B, respectively, except that the
income of the wheat growers was everywhere shifted upward by
$5,000, and Part C had 16 cases instead of the 21 in Part A.
Hence, the gains or losses of each group from the status-quo were
the same as in Parts A and B. In Part C, however, initial
equality never occurred, and final equality occurred in Case 16
(the last case) rather than Case 21. In Part D, neither initial
nor final equality occurred. Comparison of Parts C and D to
parts A and B therefore tells us about the role of inequality of
results (initial or final) as opposed to inquality of changes
(which are the same in both conditions).
Table 2 shows the statistics for WTA and WTP for the four parts.
In general, about half the subjects gave the indicated modal
response in each condition and the remaining responses were
spread out over the range. The modal (and median) response in
Parts A and C represent the first case in which the wheat growers
do not lose at all in order to help the bean growers gain. (In
Part C, this case is also the one at which the overall group
difference of $5,000 is not increased.) Apparently, most
subjects are unwilling to hurt one group at all in order to help
the other, even if the hurt is as small as 10% of the
The same heuristic accounts for the modal unwillingness to accept
any offers in Parts B and D.
|1. ||Income of ||Income of|
|bean growers ||wheat growers|
|Decline ||$40,000 ||$20,000|
|Accept ||$30,000 ||$30,000|
Statistics for four conditions of island experiment, in
thousands of dollars. The WTA measure is the increase in income
of the wheat growers required to accept the change. The WTP
measure is the greatest acceptable loss in order to increase
equality. For WTP, a value of -1 indicates that the subject
declined all offers, including the first (which had no net loss).
'N at mode` indicates the number of subjects, out of 24, who gave
the modal response.
Part A B C D
bean decline 30 40 30 40
wheat decline 30 20-30 35 25-35
bean accept 40 30 40 30
wheat accept 20-40 30 25-40 35
Measure WTA WTP WTA WTP
Mean 9.2 2.0 8.1 1.0
S.D. 5.4 3.9 4.1 3.0
Median 10 0 10 0
Mode 10 -1 10 -1
N at mode 10 11 11 11
Note that these responses lead to a large discrepancy between WTA
and WTP as measures of the value of equality (t=6.68, p=.000,
combining Parts A and C and Parts B and D). The removal of
equality from one of the options (Parts C and D vs. Parts A and
B) reduces the value of equity somewhat (t=2.60, p=.016). This
reduction is not significantly different for Part A vs. C and B
vs. D. Together, these results indicate that subjects are most
concerned about changes in the status quo, although there is some
value placed on a state of equality as well. The unwillingness
to hurt one group in order to help another group leads to large
failures to maximize net benefit.
Resistance to inequality: Experiment 2
The last experiment provided evidence for the `harm' heuristic:
that it is wrong to hurt some people for the benefit of others.
The present experiment looks for additional evidence for the
`fairness' heuristic (equal distribution) applied to changes, as
well as initial and final states.
Subjects (students) were given a questionnaire beginning: `You
are the principal of an elementary school with 200 children, 100
boys and 100 girls, in a small town. An epidemic of flu is
approaching your town. The aches and fever typically last for
about a week.
'In the following cases, you are given statistics on the number
of boys and the number of girls expected to get the flu if a
vaccination program is undertaken in your school and if it is
not. What is the greatest amount of money that you would spend
from the school budget in each case on a vaccination program?`
Subjects were told to use any units - dollars, percent, or
dollars per child - but to do so consistently, in terms of the
total or average amount spent for both boys and girls.
The first case read:
1. Boys Girls
Do nothing 15 15
Vaccinate 10 10
Twenty-two cases differed so as to manipulate the following
variables: BEGINDIFF, the beginning difference (without
vaccination) between the groups (ranging from 0 to 10);
CHANGEDIFF, the difference in the change resulting from the
vaccination (0 to 20); ENDDIFF, the end difference if the
vaccinations are given (0 to 10); TOTALCHANGE, total reduction in
disease resulting from the vaccine (10 to 20), and END, the final
overall disease rate with vaccination (30 to 20). (The cases
also varied from 30 to 50 in BEGIN, the initial number without
vaccination, but BEGIN could be deduced from END and
TOTALCHANGE.) Each case in which boys or girls were treated
differently was repeated with the sexes reversed. Beginning
levels varied from 15 to 25 for one sex or the other, and ending
levels varied from 15 to 5. In six cases, the vaccine affected
only one sex. In six cases, it affected both sexes equally.
An additional 22 cases were made up in which 'the program was
already planned` and 'you could save money for your school by
canceling the program.` Subjects were asked, 'What is the
smallest amount of savings you would have to receive by canceling
the program in each case?` These cases were identical to the
initial 22 cases except that 'Do nothing` was replaced with
'Cancel,` and 'Vaccinate` was replaced with 'Do not cancel.` The
two groups of 22 cases were distinguished by a additional
dichotomous variable, SQ (for 'status-quo`).
Thirty-three subjects received this form of the questionnaire,
and 35 subjects were given the same questionnaire with the two SQ
conditions reversed. Thirteen Ss in the original condition and
14 in the reverse condition were eliminated from analysis, either
because they did not follow instructions (9 subjects - e.g.,
simply said whether they would vaccinate or not), responded only
to TOTALCHANGE (14), or gave the same response to all cases in a
Data were analyzed by regressing each subject's responses on
BEGIN, END, BEGINDIFF, CHANGEDIFF, and ENDDIFF, separately for
each SQ condition. The effect of inequality was assessed as the
standardized coefficients for BEGINDIFF, CHANGEDIFF, and ENDDIFF.
Across all subjects, the means of the BEGINDIFF and ENDDIFF
coefficients were not significantly different from zero, nor were
they different as a function of SQ. The CHANGEDIFF coefficient
was significant in the hypothesized direction, with greater
inequality in the change leading to lower value (mean=0.100,
t=2.46, p=.009, one-tailed, for the mean coefficient of both SQ
conditions; the result was the same in both SQ conditions, with
means of 0.103 and 0.096).
Examination of individual regression coefficients confirmed the
overall results. Sixteen (out of 43) subjects had at least one
coefficient for CHANGEDIFF significant at p<.025. Four subjects
had one CHANGEDIFF coefficient significant in the wrong
direction. Only five subjects showed any other significant
There was no status-quo effect overall, as determined from the
constant terms in the regressions. This contrasts sharply with
the last experiment, in which the status-quo effect was extremely
large. In that experiment, however, changes from the status-quo
involved hurting one group in order to help another. In the
present experiment, all groups were helped by the vaccinations.
Still, a status-quo effect is often found (Samuelson &
Zeckhauser, 1988), and it remains a puzzle why it was not found
In sum, the present experiment revealed that some subjects were
concerned about inequality in the distribution of the benefits of
a vaccination program. Inequality reduced the value they placed
on the program. Once again, use of this heuristic could lead to
failure to maximize the total benefits of a program.
These experiments are preliminary because I have not ruled out a
possible alternative explanation of the results. Specifically,
subjects might take into account not only the direct costs and
benefits of options but also the indirect costs and benefits that
result from the emotional response of those affected. Wheat
growers might resent having their income cut, and this resentment
might increase the disutility of the cut itself. It is more
difficult to make this argument in the case of the children, for
they would be unlikely to know how much the vaccine helped each
of the sexes. But anticipated resentment could again have some
On the basis of the experiment reported in the last section, in
which I have tried to explicitly remove the possibility of such
emotions, I doubt that this sort of explanation accounts for the
results. More likely, I think, subjects are applying heuristics
without explicitly evaluating the consequences of the options.
Further research must be done, but, in the meantime, I believe
that the present results make more plausible the claim that many
people do not evaluate options in terms of their expected
utilities, but, rather, in terms of heuristics that yield the
best solution only some of the time.
In this paper, I have summarized the utilitarian approach to
distribution, and I have described several studies suggesting
that people's intuitions often contradict utilitarian theory.
Many people seem to think that punishments or penalties are
inherently deserved, so that they should be applied even when
deterrence is absent. People also tend to think that
compensation should be greater when harm is caused by people than
when it is caused by nature, especially (in one study) when
injurers are negligent. Greater compensation is also provided
when the injurer compensates the victim directly; this seems to
fit into a schema for compensation. Also in contrast to
utilitarian theory, people are reluctant to harm one person in
order to help another, and they are reluctant to initiate reforms
when the benefits of reform are unequally distributed, even when
the reforms are beneficial on the whole.
In all studies, these biases (departures from the theory) were by
no means universal. People differ in the extent to which they
subscribe to utilitarian theory in each case. Many subjects
follow the theory. (The number who follow the theory depends
heavily on the question, and very likely also on the wording of
the question.) It does not seem to be beyond our cognitive power
to follow it. Most people seem to have utilitarian intuitions
alongside of others. The findings of Larrick, Nisbett, & Morgan
(1990) suggest that subjects who follow this sort of theory are
at least no worse off personally than those who do not.
My own view (Baron, 1990) is that people should be taught to
understand the utilitarian approach. If instruction in the kind
of principles I have outlined were widespread, then I think that
people would have a common language for discussing their
differences about matters of social policy, and we would be able
to reduce many of our differences to empirical questions (or to
judgments about the answers to these questions, when we must
decide in the absence of data). The need for a common language
is particularly important in the years immediately ahead, when
the world must collectively decide (if only by default) how to
respond (or not respond) to an interrelated set of issues
concerning population growth, environmental degradation, and
global warming. The question of how the burden of global warming
will be distributed among different people and people of
different nations will raise very serious questions of equity
(Baron & Schulkin, in press).
If utilitarianism were better understood, those who reject it
would do so on the basis of understanding, not on the basis of
ignorance. These critics would be encouraged to work out
alternative theories more thoroughly, so that they provided
solutions to real problems just as well as utilitarian theory
Bar-Hillel, M., & Yaari, M. (1987). Judgments of justice.
Manuscript, The Hebrew University, Jerusalem.
Baron, J. (1985). Rationality and intelligence. New York:
Cambridge University Press.
Baron, J. (1988a). Thinking and deciding. New York:
Cambridge University Press.
Baron, J. (1988b). Utility, exchange, and commensurability.
Journal of Thought, 23, 111-131.
Baron, J. (1990). Thinking about consequences. Journal of
Moral Education, 19, 77-87.
Baron, J. (in press). Morality and rational choice.
Baron, J., & Jurney, J. (1990). Norms against coerced
reform. Manuscript, University of Pennsylvania.
Baron, J., & Ritov, I. (in preparation). Intuitions about
punishment and compensation in the context of tort law.
Manuscript, University of Pennsylvania.
Baron, J., & Schulkin, J. (in press). Equity, moral judgments,
and global warming. Environment.
Cohen, G. A. (1989). On the currency of egalitarian justice.
Ethics, 99, 906-944.
Elster J. (1989). The cement of society. Cambridge:
Cambridge University Press.
Foot, P. (1978). The problem of abortion and the doctrine of the
double effect. In P. Foot, Virtues and vices and other
essays in moral philosophy, pp. 19-32. Berkeley: University of
California Press. (Originally published in Oxford Review,
no. 5, 1967.)
Friedman, D. (1982). What is 'fair compensation` for death or
injury? International Review of Law and Economics, 2, 81-93.
Griffin, J. (1986). Well being. Oxford: Oxford University
Press (Clarendon Press).
Hare, R. M. (1981). Moral thinking: Its levels, method and
point. Oxford: Oxford University Press (Clarendon Press).
Hicks, J. R. (1939). The foundations of welfare economics.
Economics Journal, 49, 696-712.
Inglehart, J. K. (1987). Compensating children with
vaccine-related injuries. New England Journal of Medicine,
Kahneman, D., & Snell, J. (1990). Predicting utility. In R.
Hogarth (Ed.), Insights in decision making. Chicago:
University of Chicago Press.
Kaldor, N. (1939). Welfare propositions of economics and
interpersonal comparison of utility. Economic Journal, 49,
Keller, L. R., & Sarin, R. K. (1988). Equity in social risk:
Some empirical observations. Risk Analysis.
Landes, W. M., & Posner, R. A. (1987). The economic structure of
tort law. Cambridge, MA: Harvard University Press.
Larrick, R. P., Nisbett, R. E., & Morgan, J. N. (1990). Who
uses cost-benefit reasoning? Manuscript, University of
Michigan, Ann Arbor.
MacIntyre, A. (1984). After virtue: A study in moral theory
(2nd ed.). Notre Dame, IN: University of Notre Dame Press.
McCloskey, M. (1983). Naive theories of motion. In D. Gentner &
A. L. Stevens (Eds.), Mental models (pp. 299-324).
Hillsdale, NJ: Erlbaum.
Mill, J. S. (1859). On liberty. London: Parker & Son.
Nozick, R. (1974). Anarchy, state, and utopia. New York:
Rawls, J. (1971). A theory of justice. Cambridge, MA:
Harvard University Press.
Ritov, I., & Baron, J. (1990). Reluctance to vaccinate: omission
bias and ambiguity. Journal of Behavioral Decision Making,
Ritov, I., & Baron, J. (in press). Status-quo and omission bias.
Journal of Risk and Uncertainty.
Sabini, J., & Silver, M. (1981). Moralities of everyday
life. Oxford: Oxford University Press.
Samuelson, W., & Zeckhauser, R. (1988). Status quo bias in
decision making. Journal of Risk and Uncertainty, 1, 7-59.
Sarin, R. K. (1985). Measuring equity in public risk.
Operations Research, 33, 210-217.
Sen, A. (1987). The standard of living. Cambridge:
Cambridge University Press.
Sen, A., & Williams, B. (Eds.) (1982). Utilitarianism and
beyond. Cambridge: Cambridge University Press.
Shavell, S. (1987). Economic analysis of accident law.
Cambridge, MA: Harvard University Press.
Singer, P. (1979). Practical ethics. Cambridge University
Singer, P. (1977). Utility and the survival lottery.
Philosophy, 52, 218-222.
Spranca, M., Minsk, E., & Baron, J. (1991). Omission and
commission in judgment and choice. Journal of Experimental
Social Psychology, 27, 76-105.
Ulph, A. (1982). The role of ex ante and ex post decisions in
the valuation of life. Journal of Public Economics, 18,
Weymark, J. A. (1991). A reconsideration of the Harsanyi-Sen
debate on utilitarianism. In J. Elster & J. E. Roemer (Eds.),
Interpersonal comparisons of well-being, pp. 255-320. New
York: Cambridge University Press.
Williams, B. (1985). Ethics and the limits of philosophy.
Cambridge, MA: Harvard University Press.
1The research described here was
supported by grant SES-8809299 from the National Science Foundation. I thank Robyn
Dawes, Jon Elster, Clark McCauley, Barbara Mellers and Jay
Schulkin for comments on earlier drafts.
should not assume this, however. New Zealand has been
experimenting with a compensation system totally separate from
the tort system.
3In saying this, I do
not imply that we should invoke such goals to explain every
deviation from utilitarian theory. Rather, in making decisions,
we should honestly decide whether such goals are relevant. In
experimental work, we should try to eliminate them (Baron,
4The story is not
entirely unrealistic. New Zealand now has a system something
are unlikely to result from confusion of compensation and
deterrence, for the proportions were essentially identical in
subjects who did not think that the victim should be compensated
and in those who did think so.
6It is unlikely that subjects believe that the utility
loss of a $1,000 loss is greater than a utility gain of a $10,000
gain. Previous studies of the utility of gains vs. losses have
not found such large differences, but this was not checked here.
File translated from
On 18 Oct 2004, 21:58.