نوع دوستی غیر پدرسالارانه و اقتصاد رفاه

Bergstrom showed that a necessary condition for a Pareto optimum with non-paternalistic altruism is classification as a selfish Pareto optimum. This paper shows that Bergstrom’s result does not generalize to the benefit–cost analysis of generic changes in public goods. There may exist good projects that will be rejected by a selfish-benefit cost test, a selfish test error. Selfish test error is linked to preference interdependence between public goods and income distribution, the same condition Musgrave identified as problematic for optimal public goods provision without altruism. Transferable selfish utilities provide freedom from selfish test error.

Non-paternalistic altruism refers to the situation where a given individual, the altruist, values the welfare of another, the beneficiary. In contrast, paternalistic altruism refers to the situation where the altruist values the beneficiary’s consumption of a particular merit good, irrespective of the beneficiary’s preferences. Non-paternalistic altruism is usually represented analytically by the entry of the beneficiary’s utility function into an aggregation function that represents the altruist’s preferences over own-good consumption and the beneficiary’s utility. Bergstrom (1982) showed that a necessary condition for a Pareto optimum with non-paternalistic altruism is classification as a Pareto optimum based only on selfish considerations. Thus optimal provision of public goods ultimately depends upon selfish preferences. As opposed to determining optimal provision, the goal in most benefit–cost analysis is to determine if a particular project could potentially improve welfare. The typical analysis considers the worth of a project independent of who will pay, providing the Hicks–Kaldor compensation principle as justification for avoiding the cost allocation issue. The resulting benchmark of a “good project” is any project for which there exists a cost allocation that would allow for a Pareto improvement. The impact of non-paternalistic altruism has been discussed at length in the benefit–cost literature, including applications in risk analysis1 and environmental valuation.2 Based on Bergstrom’s result, several studies3 have further concluded that non-paternalistic altruism can and should also be ignored for the generic, discrete changes encountered in benefit–cost analysis. It has long been recognized that even in the absence of altruism, the optimal provision of public goods cannot always be determined independent of the distribution of income (Musgrave, 1969 and Bergstrom and Cornes, 1983). As noted by Musgrave (1969), the optimal provision of public goods may depend upon the optimal distribution of income which in turn will depend upon the choice of social welfare function.4 At the micro level, non-paternalistic altruism can be viewed as a social planner problem where the altruist’s aggregation function is the social welfare function. By applying Musgrave’s reasoning to this social planner problem, one can conversely conclude that the optimal distribution of income may depend upon the provision level of public goods. Similarly for the generic changes in public goods provision considered in benefit–cost analysis, the desired distribution of income between the altruist and beneficiary may change with changes in public goods provision. This paper provides an analysis of public goods provision that explicitly allows for preference interdependence between public goods and income distribution while considering cost allocation as well. Using an expenditure-type analysis it is shown that in some cases, the selfish benefit–cost test will reject a good project which is referred to as selfish test error. The general conclusion from this analysis is that passing a selfish benefit–cost test is only a sufficient condition for good projects. The same selfish transferable utilities (Bergstrom and Cornes, 1983 and Bergstrom, 1989) that circumvent Musgrave’s problem of preference interdependence for the optimal provision of public goods without altruism are shown to avoid the problem identified in this paper as well. The implications for applied benefit–cost analysis are discussed.

Economic studies, public opinion polls, and personal experiences indicate that altruism is alive and well in economic decisions involving both public and private goods. The approach recommended in the literature for analyzing the provision of public goods has been to concentrate on measuring “selfish values” to avoid measurement error. Justification for this approach has been based on Bergstrom’s result that a necessary condition for the optimal provision of public goods is optimal provision based upon selfish preferences. However as shown above in Proposition 1 and demonstrated through simple examples, there are cases where potentially welfare-improving changes in public goods may be rejected by the selfish benefit–cost test. Selfish test error is due to the issue that Musgrave (1969) identified as a problem for determining the optimal allocation of public goods without altruism: preference interdependence between public goods and the distribution of income. Based on the results from above, we can conclude that Bergstrom’s (1982) result does not fully generalize to the benefit–cost analysis of generic changes in public goods. Passing the selfish benefit–cost test is not a necessary condition for a good project, although sufficient. It is important to recognize that the analysis presented above does not undermine Bergstrom’s (1982) original result. The problem lies in the fact that benefit–cost analysis deals with a more modest problem, determining whether a specific project can lead to a Pareto improvement when starting from an inefficient level of public goods. So while Bergstrom’s result stands, the extrapolation of Bergstrom’s result to general cases of benefit–cost analysis does not. At the conceptual level, the paper shows there can be legitimate altruistic values resulting from increases in public goods. Therefore studies that potentially encompass altruistic values need not be discredited on this account as suggested by Milgrom (1993) and echoed by others. But what about practical implications? Let us consider the case for focusing on selfish values. Some valuation techniques, such as contingent valuation and stated-preference conjoint studies, provide direct evidence that altruism is operating. People express concern for others, either in their desire to provide public goods or worry over tax burden on others. The same could be said for public discourse over actual choices at the ballot box. While we usually do not have evidence of altruism through revealed preference data, this is not to say that altruism is not present. For example, environmental quality can increase demand for a recreational activity while also increasing income transfers. Although the transfer may go unmeasured, altruism is still operating and being incorporated into the data nonetheless. Should we change the way we analyze revealed preference data? Probably not, but we should not assume that revealed preference data is free from the reach of altruism. Johansson (1994) suggested that purely selfish values can be elicited through stated preference questions by asking individuals to answer willingness to pay questions conditional upon on others paying their maximum willingness to pay, i.e. when no utility gains are accruing to others. However in the presence of income transfers, beneficiaries will not be providing a purely selfish benefit. They will incorporate income transfers into their decision and so the concept of selfish value as presented in the literature is undermined under the best of circumstances. These observations lead to the question do selfish values practically exist in a world with altruism and income transfers? The analysis presented above makes clear that benefit–cost analysis with altruism cannot simply be conducted independent of who pays. This result is particularly important for studies using stated-preference techniques. If researchers are eliciting values for public goods, they need to make clear the costs to others in order to minimize measurement error. Stated-preference conjoint analysis is seeing widespread application in public goods valuation. In a random utility context, this technique may facilitate that measurement of the altruistic component of public goods provision, including testing for transferable utilities. Analyses that specifically focus on measuring the impact of altruism will lead to a better understanding of the relative importance of altruism in benefit–cost analysis.