Health and fairness with other-regarding preferences

Abstract

This paper explores how to rank social allocations when individuals have other-regarding preferences (ORPs). Unlike the few existing studies on this issue, we focus on two different private goods, only one of which generates ORPs concerns. Specifically, individuals exhibit other-regarding views about the social health state but have standard self-centered preferences over other goods, namely consumption. Our social evaluation also incorporates a fairness view that aims to reduce inequalities that originate from factors for which individuals should not be deemed responsible. By resorting to a non-resourcist approach, we derive social preferences that seek to reduce individual well-being inequalities. Such differences are assessed by means of an interpersonal comparable measure that is related to an ideal situation which involves neither externalities nor unfair inequalities. We obtain that the use of the state of perfect health as the reference value leads society to give a higher priority to those who exhibit more altruistic preferences.