Compassion and Envy in Welfare Comparisons

SOEPpapers 1105, 30 S.

Flaviana Palmisano


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Normative-based distributional comparisons across countries and over time usually build upon the assumption that individuals are selfish. However, there is a consolidated evidence that individuals also care about what others have. In this paper we propose a framework for comparing and ranking distributions that includes non-individualistic possibilities. Specifically, we consider ranking criteria that account, in one case, for the feeling of compassion that is generated by those having lower resources and, in the other case, for the feeling of envy that is generated by those having higher resources. We illustrate our framework using CNEF data for Australia, Korea, Germany, Russia, Switzerland and the US and show that accounting for the presence of envy and compassion might lead to different rankings.

JEL-Classification: D63;I31;O12
Keywords: ranking criteria, compassion, envy, social welfare, CNEF