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Values and values education in Economics

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  • pg 1
									Values and Values Education
       in Economics

        30-4-2005, CDI
• Concept of value

One-person economy
• Valuing alternative – preference ordering
• Subjective
• Discounting: same discounting criteria
Two-person economy

• Production: Separate effort
• Exchanges
• Terms of exchange: bargaining and information
  revelation
• Contracts and enforcement
• Division of benefits
• Production: Joint effort and division of product
•     Total > Sum of individual
•     Individual share > separate effort
             (in terms of physical units)
      individual valuation same as separate case
•     costs in joint production < resultant gain
n-person economy

Production and distribution

Competitive case
Prices: collapsing information ->
decision parameter
- values
- constraints
- core of competitive equilibrium
• Pareto optimality: welfare implication –
  distributive justice
Pareto improvements: gain to someone with
  no one worse-off; deviation from it implies
  loss to someone
• Rule is equitable;
• Yet: outcome may not be comfortable to
  some – e.g. the ultimatum game
Activity ONE

1    pair up:
     Proposer, and
     Acceptor
2    Offering x out of 6 chocolate to A

3     If A accepts, divide chocolate;
    – If A does not accept, both get zero.

    Record the offer and result
Group A   Offer   Accept?   Value of Acceptance
-> individual‟s concept of fairness

- Distribution of joint product, common property,
  innovation, scarce/unique goods, rights
  (parliament seats, education opportunities,
  land) …
• Analysis of social conflict or distribution of
  scarce good
• Concept of equity
- Equitable outcome (c.f. realised welfare -
  functionings [Sen, 85, 96, 2000])
- Equitable rule/process (c.f. potential welfare –
  capabilities [Sen])
Notion of distributive justice
1. Macro: just social order e.g. veil of
     ignorance
2. Local: not coherent, case by case
     because of compartmentalized
     approach
Allocation
1. Supply decisions e.g. seats in
     legislature
2. Distributive decision: rules
3. Reactive decision: action after tax
• Activity Two

• Groups of six
• Decide on an allocation scheme for
  recipient of kidney donation
• Justify you criteria, scoring and
  weighting methods
Score the following cases using your scheme:
One kidney from a man 18-years old available

•   A 45 years old police inspector, divorced, two
    kids living with him, cracked many difficult
    crime, average tissue match, on waiting list for
    1 year

•   A 36 years old professor of BioChemistry,
    made major break-through in cardio-medicine
    research, single, poor tissue match, on waiting
    list for 2 years, conditions deteriorates fast
    recently due to infection
• 20 years old man on probation for burglary,
  been in and out of prison in the last 2
  years, good tissue match, unemployed
  and has history of drug abuse, been
  hospitalized due to drug overdose, kidney
  function is very low and tried suicide after
  dialysis, living with girl friend who supports
  him financially.
• Business tycoon aged 65, good tissue
  match, married with three sons, donated
  lots of money to TWGHs, on the waiting
  list for just two months, has good
  connection with central government

• A altruistic young woman 16 years old,
  medium tissue match, does not
  communicate with others, can play music
  extraordinarily well, was invited to perform
  in Arts festival concert.
• Point system for kidney allocation in US
• 1984 Act
• “in accordance with established medical criteria, to match
  organs and individuals in the recipient list.”
• Policy:
• “organs offered for transplantation are viewed as national
  resources, …allocation … must be based on fair and
  equitable policies … The point system for kidney allocation
  was developed to accomplish major policy intrinsic in a fair
  system: to alleviate human suffering; to prolong life; to
  provide a non-discriminatory, fair and equitable system for
  organ allocation; to develop technology and foster research
  necessary for advancement and improvement of the quality
  of life of transplant recipients; to maximize organ usage and
  to decrease organ wastage; and to be accountable to the
  public that is assuming ever-increasing societal and
  economic responsibilities for life-long care required by
  transplant patients.”
Point system for kidney allocation in US
• 1984 Act
• “in accordance with established medical criteria, to match
  organs and individuals in the recipient list.”
• Policy:
• “organs offered for transplantation are viewed as national
  resources, …allocation … must be based on fair and
  equitable policies … The point system for kidney allocation
  was developed to accomplish major policy intrinsic in a fair
  system: to alleviate human suffering; to prolong life; to
  provide a non-discriminatory, fair and equitable system for
  organ allocation; to develop technology and foster research
  necessary for advancement and improvement of the quality
  of life of transplant recipients; to maximize organ usage and
  to decrease organ wastage; and to be accountable to the
  public that is assuming ever-increasing societal and
  economic responsibilities for life-long care required by
  transplant patients.” (from P. Young, equity)
• Committee: medical experts, patient groups
  representatives, ethicists, general public
Broad criteria:
• Efficacy: likelihood of success
• Need: lack of alternatives
• Disadvantage: advantage to patient with difficult match

• a kidney/tissue/antigen match -> utilitarian + efficiency
• b medical urgency -> Rawlsian
• c compensation for bad-luck(difficult tissue match) or
  long wait -> Rawlsian

• impartiality + consistency + standard of comparison +
  priority method
• => note Arrow‟s Impossibility Theorem on absence of
  completely satisfactory to get social consensus through
  aggregating individual opinions.
• Allocation rules
•     Parity: claimants all equally treated
•     Proportionality: differences among
      claimants -> allocation weighting
•     Priority
• normative principles (applied, implied,
  decided)
• empirical rules (the set usually is a
  compromise)
• Normative Theories of justice
• 1 equity principle (Aristotle)
    -allocation proportionate to contribution
    contribution?
    -Indivisible good?
2 maximizing the total welfare (Classical
  utilitarism)
  „greatest good for the greatest number‟
- cardinal comparisons across individuals?
- Might harm some for benefit of others
3 least well-off be as well-off as possible
  (Rawls)
• maximin/difference principle
• well-off in terms of means/instrument
  (income, opportunity, power, self-respect)
  to the least well-off
• observable instrument, no need for
  interpersonal comparisons
• no need to harm others
• expected benefit Vs costs to other
  members may be out of proportion
• weighting of primary goods?
4 No Envy
•   - changing places? Bundles for
    allocation?
•   - allocate => divide
•   - requires no information advantage of
    one party

								
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