Fair Utilitarianism

URL des Documents de travail : http://centredeconomiesorbonne.univ-paris1.fr/documents-de-travail-du-ces/International audienceUtilitarianism plays a central role in economics, but there is a gap between theory, where it is dominant, and applications, where monetary criteria are often used. For applications, a key di culty for utilitarianism remains to de ne how utilities should be measured and compared across individuals. Drawing on Harsanyi’s approach (Harsanyi, 1955) involving choices in risky situations, we introduce a new normalization of utilities that is the only one ensuring that: 1) a transfer from a rich to a poor is welfare enhancing, and 2) populations with more risk averse people have lower welfare. We embed these requirements in a new characterization of utilitarianism and study some implications of this “fair utilitarianism” for risk sharing, collective risk aversion and the design of health policy