Compassion and envy in distributional comparisons

Abstract

AbstractNormative-based distributional comparisons across countries and over time 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 and, in the other case, for the feeling of envy. These feelings are generated respectively by those having lower resources and those having higher resources. We illustrate our framework using CNEF data for Australia, Korea, Germany, Switzerland, and the US and show that accounting for the presence of compassion and envy might lead to different welfare rankings.