Statistical Normalization Methods in Interpersonal and Intertheoretic Comparisons

Abstract

A major problem for interpersonal aggregation is how to compare utility across individuals; a major problem for decision-making under normative uncertainty is the formally analogous problem of how to compare choice-worthiness across theories. We introduce and study a class of methods, which we call statistical normalization methods, for making interpersonal comparisons of utility and intertheoretic comparisons of choice-worthiness. We argue against the statistical normalization methods that have been proposed in the literature. We argue, instead, in favor of normalization of variance: we claim that this is the account that most plausibly gives all individuals or theories ‘equal say’. To this end, we provide two proofs that variance normalization has desirable properties that all other normalization methods lack, though we also show how different assumptions could lead one to axiomatize alternative statistical normalization methods.