Equality of Talent Resources: Procedures or Outcomes?

Abstract

In chapter 2 of Sovereign Virtue, Dworkin proposes the hypothetical insurance market as the most promising way of explaining what equality of resources requires, in the face of unequal talents. Roughly, this analytical device imagines that people take insurance coverage for lack of income-earning talent, assuming that everyone has the same risk of ending up anywhere, high or low, within the market reward structure of a society that equally distributes external resources. Levels of insurance coverage are offered on the understanding that policyholders pay premiums out of their future earnings, and that premiums must be sufficient to sustain insurance payouts at each level of coverage. Under these equal conditions, the insurance choices made by the community define the inequalities of earning power that equality of resources would permit. These choices are to be implemented as accurately as possible, through programs of tax and transfer. I have always been puzzled by this insurance argument, for the following reason. On the one hand, the argument strongly suggests a procedural view on what equality of resources demands, in the sense that whatever result emerges from the hypothetical insurance market is morally legitimate by virtue of responsible choice, and should for that reason be carried out faithfully in the design of society’s redistributive framework. Now Dworkin also argues that prudent insurance under