Erik Schokkaert

The Capabilities Approach

Capabilities and functionings are new and attractive concepts for assessing the well-being and advantage of individuals. Functionings refer to a person’s achievements, i.e. what she manages to do or to be. Capabilities refer to her real opportunities and incorporate the idea of freedom. We discuss how recent theoretical and empirical work has improved our insights in some of the key questions of the approach. How to measure opportunities and how to balance freedom and responsibility? How to formulate a list of capabilities which can be used to analyse changes over time and differences between different societies without being open to manipulation? How to construct an overall index of well-being and what should be the relative role of a priori ethical evaluations and of the opinions of the individuals themselves? What is the relationship between measures of well-being and advantage at the individual and at the aggregate level? To make further progress it is crucial, first, to estimate structural models with individual data, analysing the link between individual achievements, the socioeconomic and environmental background of the persons concerned and the specific features of the individual processes of choice and decision-making; and, second, to integrate the insights from these models in a coherent ethical framework specifying the role of individual preferences and the limits of personal responsibility.

Equality of opportunity versus equality of opportunity sets

We characterize two different approaches to the idea of equality of opportunity. Roemer’s social ordering is motivated by a concern to compensate for the effects of certain (non-responsibility) factors on outcomes. Van de gaer’s social ordering is concerned with the equalization of the opportunity sets to which people have access. We show how different invariance axioms open the possibility to go beyond the simple additive specification implied by both rules. This offers scope for a broader interpretation of responsibility-sensitive egalitarianism.

Responsibility-Sensitive Fair Compensation in Different Cultures

Recently many philosophers and social choice theorists have questioned traditional welfare egalitarianism by introducing a notion of responsibility. They propose to distinguish between two sets of individual characteristics: those for which individuals are to be kept responsible and those for which they can be compensated. This approach raises the related questions of where to draw the line between these two sets of characteristics and how to operationalise the notion of “responsibility-sensitive fair compensation”. The answers to these questions may depend on the cultural context. We present some empirical results from questionnaire studies in Belgium, Burkina Faso and Indonesia. The notion of control seems to play an important role in determining the variables for which individuals are to be held responsible. The strong notion of “full compensation” is clearly rejected in favour of more conservative distribution rules. Moreover, a large fraction of the respondents take the non-liberal position that the talented should be punished if they do not use their talents in a productive way. We find some intercultural differences. Belgian students are more in favour of redistribution. Indonesian students are the most conservative.

Moral intuitions and economic-models of distributive justice

We argue that formal theories of justice cannot neglect the moral intuitions existing in society and illustrate this claim with empirical results. We analyse the perception of justice in a production context by starting from the surplus sharing model. Our questionnaire method is closely related to the work of Yaari and Bar-Hillel [14]. Our results suggest that differences in effort are considered to be the main justification for income differences. Our respondents strongly disagree about the remuneration of innate capabilities. It is further suggested that surplus sharing and cost sharing models cannot be treated symmetrically, because people react differently towards gains and losses.

Equity in Health and Health Care

We discuss the conceptual foundations of measuring (in)equity in health and health care. After an overview of the recent developments in the measurement of socio-economic inequalities and in racial disparities, we show how these partial approaches can be seen as special cases of the more general social choice approach to fair allocation and equality of opportunity. We suggest that this latter framework offers many new analytical possibilities and is sufficiently rich to accommodate various ethical views. We emphasize that horizontal and vertical equity are intricately linked to each other. We then argue that a focus on overall well-being is necessary to put the partial results on health (care) inequity into a broader perspective and we discuss the pros and cons of various methods to evaluate the joint distribution of health and income: multidimensional inequality indices, dominance approaches, the use of happiness measures and finally the concept of equivalent income. Throughout the chapter the theoretical analysis is complemented with an overview of recent empirical results.We discuss the conceptual foundations of measuring (in)equity in health and health care. After an overview of the recent developments in the measurement of socioeconomic inequalities and in racial disparities, we show how these partial approaches can be seen as special cases of the more general social choice approach to fair allocation and equality of opportunity. We suggest that this latter framework offers many new analytical possibilities and is sufficiently rich to accommodate various ethical views. We emphasize that horizontal and vertical equity are intricately linked to each other. We then argue that a focus on overall well-being is necessary to put the partial results on health (care) inequity into a broader perspective, and we discuss the pros and cons of various methods to evaluate the joint distribution of health and income: multidimensional inequality indices, dominance approaches, the use of happiness measures, and finally the concept of equivalent income. Throughout the chapter the theoretical analysis is complemented with an overview of recent empirical results.

Responsibility sensitive egalitarianism and optimal linear income taxation

We compute optimal linear taxes on labor income with quasilinear preferences between income and labor. Agents differ in their productivity and in their taste for leisure. A responsibility sensitive egalitarian wants to compensate for the former differences but not for the latter. This intuition is captured by a social planner that wants to equalize opportunities for subjective utility along the lines of the criteria proposed by Roemer and Van de gaer, and by a social planner evaluating social states based on an advantage function representing reference preferences. Our theoretical results are illustrated with empirical data for Belgium.

The Incidence of Social Security Contributions: An Empirical Analysis

We estimate the effect of social security contributions on wagecosts with sectoral panel data from Eurostat. More than half of the burden of thesecontributions is borne by the employees. Shifting of the burden towards theemployees is more pronounced if the reciprocity between contributions and benefits is stronger. These findings are in line with the predictions derived from anefficient bargaining model.

Risk perceptions and distributional judgments

Abstract We examine the role of laboratory questionnaire-experiments and recent applied empirical research on attitudes in understanding the relationships between peoples perceptions of inequality and their perceptions of risk. We consider risk in three interpretations: ‘in vacuo’, in day-to-day life and in the original position.

Tax reform results with different demand systems

Abstract We calculate the marginal welfare costs for a twelve-commodity classification of the Belgian indirect tax system. Price elasticities are estimated with Rotterdam, AIDS, CBS and the linear expenditure system. The ranking of the marginal welfare costs is similar when we use unrestricted estimates of the first three systems. After the symmetry condition of the Slutsky matrix is imposed, the differences become more important. However, they diminish with increasing inequality aversion.

An empirical approach to distributive justice

Abstract This paper starts from the idea that it would be interesting to complement the deductive reasoning about economic justice with an empirical approach which tries to describe and interpret the actual value judgements held by the economic agents. We present results from a pilot study with 180 subjects. Factor analysis indicates that it makes sense to work with desert and compensation criteria, as most economists and philosophers do. We then illustrate that it is possible to operationalise equity judgements, estimating for each subject separately an equation describing his perception of the equitable compensatory income variation. We use the factor analysis results to construct a ‘compensation’ and a ‘desert’ index. All coefficients can be nicely interpreted and interesting patterns of interindividual variation emerge.