Utilitarian Criterion Research Articles

Utilitarianism and Fairness in Portfolio Positioning

The paper introduces the theory of optimal positioning of financial products. It is illustrated in the context of long-term intertemporal portfolio allocation and can be applied for example to asset allocation funds. We embed this problem in location theory: the portfolio is optimized within the investors' risk aversion dimension. For the CRRA utility functions, we compute explicitly the distance functions. For the first (utilitarian criterion), the average utility of the investors is maximized. For the second one (fairness criterion), the choice of portfolio is optimized so that the average monetary loss due to the lack of customization is minimized. Given the distribution of investors' risk aversion, we provide a solution method and an algorithm to optimally position standardized portfolio along one of these two criteria.

Utilitarianism and fairness in portfolio positioning

The paper introduces the theory of optimal positioning of financial products. It is illustrated in the context of long-term intertemporal portfolio allocation and can be applied for example to asset allocation funds. We embed this problem in location theory: the portfolio is optimized within the investors’risk aversion dimension. For the CRRA utility functions, we compute explicitly the distance functions. For the first (utilitarian criterion), the average utility of the investors is maximized. For the second one (fairness criterion), the choice of portfolio is optimized so that the average monetary loss due to the lack of customization is minimized. Given the distribution of investors’ risk aversion, we provide a solution method and an algorithm to optimally position standardized portfolio along one of these two criteria.

Social time preference revisited

The article reconsiders the implications of the choice of pure social time preference for intergenerational equity in the presence of a time-consistent utilitarian social welfare criterion. The analytic framework is a setting with overlapping generations, lifetime uncertainty, population growth and technical progress. The analysis identifies upper and lower bounds for the feasible range of social discount rates and draws a corresponding distinction between “gerontocratic” and “Stalinist” optimal plans. The paper corrects a number of inaccurate propositions in a related earlier contribution by Marini and Scaramozzino (2000) to this journal.

The Normative Analysis of Tagging Revisited: Dealing with Stigmatization

Should income transfers be conditional upon personal characteristicsof the potential recipients (the so-called tagging) or should they only be tied to reported incomes? This question is addressed in a partial equilibrium setting distinguishing two types of jobs and a distribution of worker types. In a system with tagging, there is clear evidence that the assessment of the eligibility of applicants creates stigmatization. By assumption, the intensity of stigma is exogenously distributed. Then, tagging is always suboptimal under a Rawlsian criterion. With a utilitarian criterion, the analysis shows tht tax/transfer systems with and without tagging can solve the first-order optimality conditions.A numerical analysis suggests that tagging can only be recommended if the distribution of intensity of stigmatization relative to earnings is highly concentrated on low values. However, this is only a necessary condition. Tagging is never optimal if the dispersion of abilities among the high-ability people is too large or too narrow.

The Normative Analysis of 'Tagging' Revisited: Dealing with Stigmatization

Should income transfers be conditional upon personal characteristics of the potential recipients (the so-called tagging) or should they only be tied to reported incomes? There is clear evidence that tagging and its assessment of the eligibility of applicants creates stigmatization. In this context, tagging is always suboptimal under a Maximin criterion. With a utilitarian criterion, tagging can only be recommended if the distribution of the intensity of stigmatization relative to earnings has small mean and variance and if the mean and variance of distribution of abilities among the high-ability people are neither too large nor too small.

Affect, Appraisal, and Consumer Judgment

When consumers receive verbal information about a product's attributes, the influence of the affect they are experiencing on their product evaluations depends on their belief that the product should be judged on the basis of hedonic versus utilitarian criteria. When consumers see the product before they receive attribute information, however, the product's appearance can stimulate them to form an affect-based initial impression that they later use as a basis for judgments independent of the criteria they would otherwise apply. Consequently, the mood that consumers happen to be in has different effects on their judgments than it would otherwise.

Comparing business ethics in Russia and the US

In this comparative survey of seventy-three Russians and ninety-two US managers, we explore differences and similarities in ethical decision-making among respondents from these two countries within a business context. Using Reidenbach and Robin's (1988) multi-criteria ethics instrument, we examined whether business people in Russia and the US differed in their judgement of the ethical content of business decisions. Russia and the US provide an interesting comparison because of the extreme differences in their cultural characteristics as well as in their economies and related business development. Our results indicate that, while Americans, in general, tended to assess certain actions as less ethical when applying utilitarian or justice criteria, the ethical judgements of the two groups differed by situation and by criteria employed.

The Malleability of Undiscounted Utilitarianism as a Criterion of Intergenerational Justice

Discounting future utilities is often justified by the ethically motivated objective of protecting earlier generations from the excessive saving that seems to be implied by undiscounted utilitarianism in productive economies. We question this justification of discounting by showing that undiscounted utilitarianism has sufficient malleability within important classes of technologies: any efficient and non‐decreasing allocation can be the unique optimum according to an undiscounted utilitarian criterion for some choice of utility function.

Income Uncertainty and Optimal Redistribution

1. Introduction Redistribution policy under a utilitarian criterion aims to transfer dollars from one group in the population to another if the (weighted) utility gain to the recipients exceeds the utility cost to the donors. Under diminishing marginal utility of income, part of any exogenous change in one group's income should be shared with the other group. For example, if taxpaying workers suffer a negative shock to their mean earnings, then part of this utility shock should be spread to nonworkers in the form of lower transfer payments, and vice versa for the case of a positive shock. This article demonstrates the counterintuitive result that, under reasonable preference representations, a policymaker may respond optimally to a negative utility shock by redistributing income away from the harmed group, thus exacerbating the group's utility loss. In particular, under risk aversion, a mean-preserving increase in the variance of income typically has an effect on well being analogous to a decrease in mean income.1 It may nevertheless be welfare enhancing to transfer income away from those suffering an increase in income uncertainty even though this policy compounds their welfare loss. The main ideas can be demonstrated in a simple framework. For illustration, the analysis will focus on redistribution from taxpaying workers to nonworkers. The central result is that a meanpreserving increase in earnings uncertainty among taxpayers can increase optimal transfer amounts to nonworkers (increasing optimal income replacement rates) even though the redistribution exacerbates the taxpayers' utility loss from the increase in uncertainty. 2. Model [Footnote]1 Many factors in the economy affect earnings uncertainty even conditional on being employed, such as the form of compensation (e. …

Business ethics in Brazil and the U.s.: A comparative investigation

In this comparative survey of 126 Brazilian and U.S. business professionals, we explore the effect of national culture on ethical decision-making within the context of business. Using Reidenbach and Robin's (1988) multi-criteria ethics instrument, we examined how these two countries' differences on Hofstede's individualism/collectivism dimension are related to the manner in which business practitioners make ethical decisions. Our results indicate that Brazilians and Americans evaluate the ethical content of actions or decisions differently when applying utilitarian criteria. By contrast, business people from both countries do not differ significantly when they use egoistic criteria in evaluating the ethical nature of business decisions.

Social class influences on purchase evaluation criteria

This article investigates social class, income and gender effects on the importance of utilitarian and subjective evaluative decision criteria over a variety of products considered more and less socially significant. Variations in attitude, motivation and value orientations associated with differences in occupational opportunities and demands, childhood socialization patterns and educational influences may lead consumers to vary in many of their purchase behaviors across social classes. It was found here that social class is a significant predictor of evaluative criterion importance for a number of products. The influence was moderated by the objectivity of the criterion and the social sensitivity of the product. Because of its link to choice limitation in decision making, income was expected to be an influence on evaluative criteria. A greater number of utilitarian criterion importance ratings for socially non‐significant products were related to income, and utilitarian criteria importance, in general, was negatively associated with income for low social value products. Application of relative class income levels led to a substantially greater number of significant relationships compared with income or social class alone. The gender of respondents was found to relate to the observed associations, with women generally attaching more importance to virtually all evaluative criteria and exhibiting different relative importance levels for criteria across class and income levels.

Personal goods, efficiency and the law

Personal goods, such as leisure and life expectancy, have no unique market price. When people's utilities depend in part on personal goods and when everybody's utility function is the same, the equilibrium valuation of personal goods is higher for rich people than for poor people. Thus, rigidly applied in cost–benefit analysis or in the design of the law, an efficiency criterion would place a higher value upon the leisure or life of the rich than upon the leisure or life of the poor. To do otherwise is to subordinate efficiency to a utilitarian criterion or to civil rights.

Sometimes It Just Feels Right: The Differential Weighting of Affect-Consistent and Affect-Inconsistent Product Information

An affect-confirmation process is proposed to explain the conditions in which information that is similar in valence (i.e., evaluatively consistent) with a person's mood is weighted more heavily in product judgments. Specifically, the affect that participants experience as a result of a transitory mood state may appear to either confirm or disconfirm their reactions to product information, leading them to give this information more or less weight when evaluating the product as a whole. This affective confirmation typically occurs when hedonic criteria are considered more important in evaluation than utilitarian criteria. Four experiments confirmed implications of this conceptualization.

Income tax credits and exemptions

A utilitarian criterion embodying both horizontal and vertical equity commands is proposed which determines the equitable income tax. We show that a family size related tax credit cannot be considered equitable, whereas an exemption can if a particular social evaluation function, defined over income and needs, is adopted, one which is, except in the narrowest of circumstances, inconsistent with the widespread practice among social policy analysts of equivalizing incomes to take account of needs. This finding presents a challenge to find a deeper justification for the use of credits (and indeed, exemptions) by tax designers.

PUNISHMENT AND THE UTILITARIAN CRITERION OF RIGHT AND WRONG

The Southern Journal of PhilosophyVolume 29, Issue 1 p. 109-125 PUNISHMENT AND THE UTILITARIAN CRITERION OF RIGHT AND WRONG Walter E. Schaller, Walter E. Schaller Texas Tech University Walter E. Schaller is assistant professor of philosophy at Texas Tech University. He has published articles on ethics in Philosophy and Phenomenological Research, Philosophia (Israel), and in the Southern Journal of Philosophy.Search for more papers by this author Walter E. Schaller, Walter E. Schaller Texas Tech University Walter E. Schaller is assistant professor of philosophy at Texas Tech University. He has published articles on ethics in Philosophy and Phenomenological Research, Philosophia (Israel), and in the Southern Journal of Philosophy.Search for more papers by this author First published: Spring 1991 https://doi.org/10.1111/j.2041-6962.1991.tb00580.xCitations: 1 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume29, Issue1Spring 1991Pages 109-125 RelatedInformation

Normative and Instrumental Functions of Equity Criteria in Individual Choices of the Input-Payoff Distribution Pattern

This article examines how utility and equity criteria interact to account for individual choices between alternative combinations of inputs and payoffs in a group. Two kinds of utility criteria are assumed: One is purely individualistic (self-interest) and the other includes consequences of one's choice for other members of a group (cooperation, competition). Three criteria of equity and justice are taken into account: equality of payoffs, the right payoff (according to contribution), and relative equity. An experiment was designed to make a subject choose from each pair of a set of 16 alternative distributions of two levels of inputs and payoffs for himself and a partner who was unknown to him. The subjects' choices turned out to be basically consistent, the number of circular triads being much below chance expectation. The utilitarian criteria were more commonly applied than the egalitarian ones, with predominance of self-interest and cooperation. However, 68% of the subjects used a mixture of rules similar to maximin, whereby both the Rawlsian claim of distributive justice and the Pareto-optimal demands were partly satisfied. The criteria of equity and justice operated the impersonal, normative way only up to a certain level of the subjects' losses. They were also used interchangeably to justify the subjects' own gains and to prevent their partners from gaining more than they did.

De sterkte van voorkeuren en de kritiek van principes. Hare over normatieve argumentatie

In the light of Hare’s argument in his latest book on Moral Thinking we might deal with two fundamental questions concerning normative reasoning: (1) What precisely is the content of a utilitarian criterion of moral rightness, i.e. what does it mean to say of an action that it results in an ‘equal amount of happiness’ or in ‘more happiness’ than another action? (2) How should a utilitarian criterion be used in a process of deliberation, i.e. in choosing between alternative courses of action, what procedure should we follow to reach a decision by means of a utilitarian criterion of moral rightness? Hare’s answers to these questions are critically discussed, including his views on the satisfaction of preferences and the indirect use of the criterion as well as his requirement of prudence and his claim that it is not a philosophical question when to engage in critical thinking.

The utilitarian criterion, finite sensibility, and the weak majority preference principle

This study is a further analysis of the approach taken by Yew-Kwang Ng to derive the utilitarian criterion. Specific for the model is that individual preferences are finitely sensible. In this framweork an analysis of the consequences on social preferences when different kinds of value premises are imposed is made. It is found that the utilitarian criterion is the unique consequence only for very special choices of the value premise. In addition, uniqueness requires the “underlying preferences” be cardinal. It is also found that finite sensibility induces approximate cardinalization of preferences.

The utilitarian criterion, finite sensibility, and the weak majority preference principle

The utilitarian criterion, finite sensibility, and the weak majority preference principle

Economic growth and environmental pollution under the max-min principle

This paper first analyzes the interactions between capital accumulation and environmental pollution under the program of sustained constant utility, which depends on per capita consumption and pollution, over all generations. Then the optimal program of economic growth is discussed. The implications of the constant-utility criterion (or the max-min principle) are compared with those of the utilitarian criterion which has been widely adopted in environmental pollution literature. Subsequently, the analysis incorporates pollution-abatement investment and exhaustible resources. We conclude that the max-min principle works fairly satisfactorily in this world.