Applying concepts from Mill and Sen to the standard of living for disabled people. Mimeo

An important policy issue relates to how governments make expenditure decisions (income transfers or in-kind goods or services) to assist people subjected to various levels of disability. This is an issue often discussed by relatives/friends/carers of people with disability: such discussions are often characterised by anger at government decisions of one kind or another. Although this policy issue is of substantive economic importance, there is no theoretical and/or empirical literature that addresses the problem. This paper is concerned with applying some economic concepts associated with the nineteenth century English philosopher/economist, John Stuart Mill, and the 1998 Nobel Laureate in Economics, Amartya Sen. Mill’s general conception of how government should behave in treating citizens (the general notion of equality) has subsequently been spelt out in detail in the public finance literature on principles of taxation, viz. fiscal equity. More specifically, the relevant concepts are those of horizontal equity and vertical equity, where the former value judgement involves “the equal treatment of equals ” and the latter “the unequal treatment of unequals”. These principles are combined with Sen’s recent discussion of the issue of “conversion handicap”, i