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Questions and Answers
What is the concept that involves weighing the benefits and harms of risks in relation to justice?
What is the concept that involves weighing the benefits and harms of risks in relation to justice?
Expected utilitarianism only applies to retrospective evaluations of risk.
Expected utilitarianism only applies to retrospective evaluations of risk.
False
What framework is discussed in relation to risks and justice?
What framework is discussed in relation to risks and justice?
Risk and Justice Framework
The term ______ refers to the evaluation of risks that considers outcomes before they occur.
The term ______ refers to the evaluation of risks that considers outcomes before they occur.
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Match the terms with their definitions:
Match the terms with their definitions:
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Which concept is often associated with measuring fairness across generations?
Which concept is often associated with measuring fairness across generations?
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Ex-ante utilitarianism assesses outcomes after the risks have occurred.
Ex-ante utilitarianism assesses outcomes after the risks have occurred.
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What framework is used to analyze risk and justice in the discussed lecture?
What framework is used to analyze risk and justice in the discussed lecture?
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___ refers to the evaluation of risks and rewards before they happen.
___ refers to the evaluation of risks and rewards before they happen.
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Match the following terms with their descriptions:
Match the following terms with their descriptions:
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What aspect of risk does the lecture emphasize?
What aspect of risk does the lecture emphasize?
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Utilitarianism is primarily concerned with maximizing individual rights.
Utilitarianism is primarily concerned with maximizing individual rights.
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What is the main ethical consideration when examining risks across generations?
What is the main ethical consideration when examining risks across generations?
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What does ex-ante equity suggest about the two sets of values (r0, r1) and (x0, x1)?
What does ex-ante equity suggest about the two sets of values (r0, r1) and (x0, x1)?
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Ex-post equity is focused on the desirability of outcomes after generations have experienced them.
Ex-post equity is focused on the desirability of outcomes after generations have experienced them.
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What is the main concern addressed by ex-ante equity?
What is the main concern addressed by ex-ante equity?
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Ex-post equity reveals that inequity is less likely for generation 1 at (r0, r1) than at (x0, x1). Therefore, generation 1 is viewed as more ________.
Ex-post equity reveals that inequity is less likely for generation 1 at (r0, r1) than at (x0, x1). Therefore, generation 1 is viewed as more ________.
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Match the following concepts with their definitions:
Match the following concepts with their definitions:
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Which of the following concepts is associated with assessing fairness in intergenerational contexts?
Which of the following concepts is associated with assessing fairness in intergenerational contexts?
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The discussion of risk and justice is irrelevant to intergenerational fairness.
The discussion of risk and justice is irrelevant to intergenerational fairness.
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What is the expected outcome of having less inequity between generations?
What is the expected outcome of having less inequity between generations?
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What does the notation $U_i(y_i)$ represent in the context of individual rationality?
What does the notation $U_i(y_i)$ represent in the context of individual rationality?
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Ex-ante utilitarianism focuses on the outcomes after they have occurred.
Ex-ante utilitarianism focuses on the outcomes after they have occurred.
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What is the main focus of Assumption 1 regarding individual rationality?
What is the main focus of Assumption 1 regarding individual rationality?
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The representation of social preferences is discussed under Assumption __.
The representation of social preferences is discussed under Assumption __.
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Match the concepts with their definitions:
Match the concepts with their definitions:
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Which of the following best describes the role of $eta^s$ in the expected utility frameworks?
Which of the following best describes the role of $eta^s$ in the expected utility frameworks?
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What is the preference of society in ex-post fairness situations?
What is the preference of society in ex-post fairness situations?
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The standard approach includes discussions on intergenerational fairness.
The standard approach includes discussions on intergenerational fairness.
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Expected utilitarianism is considered a middle ground between ex-ante and ex-post concerns.
Expected utilitarianism is considered a middle ground between ex-ante and ex-post concerns.
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What key aspects are considered under the standard approach to ethics of risk?
What key aspects are considered under the standard approach to ethics of risk?
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What is the relationship between risk and justice according to the discussed framework?
What is the relationship between risk and justice according to the discussed framework?
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Expected utilitarianism incorporates ______ concerns.
Expected utilitarianism incorporates ______ concerns.
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In which context is it stated that ex-ante and ex-post concerns can be captured but not jointly?
In which context is it stated that ex-ante and ex-post concerns can be captured but not jointly?
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Randomizing outcomes is preferred over providing the same outcome with equal probability in all fairness scenarios.
Randomizing outcomes is preferred over providing the same outcome with equal probability in all fairness scenarios.
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What can be said about the coexistence of ex-ante and ex-post considerations according to the framework?
What can be said about the coexistence of ex-ante and ex-post considerations according to the framework?
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What is one significant issue related to the timing of risk resolution mentioned in the framework?
What is one significant issue related to the timing of risk resolution mentioned in the framework?
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Expected utilitarianism takes into account preferences for risk in its calculations.
Expected utilitarianism takes into account preferences for risk in its calculations.
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What underlying assumption is commonly found in discussions of risk and justice?
What underlying assumption is commonly found in discussions of risk and justice?
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A strong assumption in risk and justice discussions is that one should eliminate __________.
A strong assumption in risk and justice discussions is that one should eliminate __________.
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In ex-ante and ex-post utilitarianism, which aspect is primarily evaluated?
In ex-ante and ex-post utilitarianism, which aspect is primarily evaluated?
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Which of the following is NOT a concern associated with the standard approach to risk?
Which of the following is NOT a concern associated with the standard approach to risk?
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Inequalities in the context of risk are clearly defined and universally agreed upon.
Inequalities in the context of risk are clearly defined and universally agreed upon.
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Study Notes
Lecture 5: Intergenerational Fairness
- Lecture delivered by Paolo G. Piacquadio, Institute of Economics, University of St. Gallen, on October 18, 2024.
- Topic focused on intergenerational fairness, specifically the ethics of risk, risk and justice, and frameworks like expected utilitarianism, ex-ante and ex-post utilitarianism, and risk and time.
Discussion of the Ethics of Risk
- Explored frameworks for assessing risky income distributions across generations.
- Highlighted the complexity of summarizing large amounts of information from matrices of incomes and vectors of probabilities.
- Questioned if individuals' and society's risk preferences should align.
- Emphasized the crucial role of time in risk assessment, contrasting the "before" (risk unresolved) and "after" (risk resolved) states.
- Underlined the fundamental importance of information availability regarding the risk.
Notation
-
Defined the variables:
- / = number of individuals
- S = number of states of the world
- πₛ = probability of state s. The sum of all probabilities across all states must equal 1.
-
Introduced a matrix, y, representing a risky income distribution, with rows representing individuals and columns representing states of the world.
Standard Approach
- Assumption 1 (Individual Rationality): Individual preferences are represented by expected utility. The utility of an individual in state s is given by Ui (yi) = ∑ πₛ uᵢ(yᵢₛ)
- Assumption 2 (Social Rationality): Social welfare is represented by an expected utility. W(y) = ∑ πₛ w (yₛ).
- Assumption 3 (Pareto Efficiency): If individuals are better off, social welfare is higher.
Expected Utilitarianism: Result
- Theorem: Assumptions 1-3 imply that social welfare is the sum of individuals' expected utilities, or the expectation of the total social welfare in each state. W(y) = ∑ᵢ Uᵢ(yᵢ) = ∑ₛ πₛ ∑ᵢ uᵢ(yᵢₛ)
- Social Welfare: The sum of individuals' expected utilities, or the expectation of social welfare in each state.
Expected Utilitarianism: Pros and Cons
- Pros: Simple, intuitive, powerful.
- Cons: Inequality aversion is driven by risk aversion, ignoring utility distribution across different states and individuals. No consideration given to the timing of risk resolution.
Inequality Aversion and Risk Aversion
- Introduced constant relative risk, noting that expected utilitarianism requires inequality aversion to be precisely equal to the risk aversion (γ).
Beyond Expected Utilitarianism
- Highlighted scenarios where societal preferences might favor ex-ante or ex-post egalitarianism, contrasting these with preferences based on expected utility.
Expected, Ex-ante, and Ex-post
- Explained that ex-ante and ex-post concerns can be considered separately but not together.
- Defined ex-ante and ex-post utilitarianism, showing how these relate to inequality aversion, using function f and g.
- Explained that expected utilitarianism is a special case of this type of framework when f and g are simply the identity function.
Introduction
- The standard approach to intergenerational considerations is to integrate the expectation and application into the standard exponentially discounted utilitarian criterion.
- Yet, it is unclear if this is the right approach.
- Issues with this standard approach include disregarding the timing of risk resolution, lacking clear methods for aggregating risk preferences, and lacking consensus on how to account for extinction risk.
Equality with Risk and Time
- Questioned how to ensure equality when generations face different risk profiles.
- Argued that simplistic equality without consideration for risk is insufficient.
- Inequality is an important consideration in this area.
Equitable Consumption: An Optimum
- Generally, equitable consumption is not considered to be the best distribution.
- Small deviations from this equitable outcome might be acceptable if these lead to enough efficiency gains.
- Introduced the concept of a trade-off between equitable consumption and efficiency
Ex-ante Equity
- Introduced two axioms as part of this concept, focusing on the idea of less inequality between generations.
Ex-post equity
- Introduced the concept of less likelihood for inequality in the outcome for a later generation.
Main Result
- Reference-Dependent Utilitarianism: This model incorporates the use of a reference point (r) to account for inequality aversion, allowing for endogenous discounting to depend on factors like the risk of extinction or the level of future risk and discounting.
- Discounting: Higher risk or risk of extinction may lead to more discounting; thus, higher-risk future scenarios may reduce future discounting.
- Expected Utilitarianism: A special case when the reference point is constant.
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Description
This quiz covers Lecture 5 delivered by Paolo G. Piacquadio, focusing on intergenerational fairness and the ethics of risk. It dives into frameworks of risk assessment, utilitarianism concepts, and the significance of time in evaluating risks across generations. Test your understanding of these complex ideas and their implications for society.
