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ECON 3340 (1)
Chapter 3

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York University
ECON 3340
Andrea Podhorsky

ECON3340 Chapter 3: Social Choice: How much environmental protection? Individual preferences regarding environmental protection Two issues in individual preferences 1. How do individuals view the environment? 2. How do we collect or aggregate all those individual opinions to create an opinion for society as a whole? Normal approach: assume that any preferences are possible and not be too concerned about the nature of individual preferences. Four different philosophical perspectives to illustrate different ethical perspectives A. Biocentrism 生物中心论 - Important distinction is made between instrumental value and intrinsic value.  Instrumental value 工具价值观: pertains to usefulness  Intrinsic value 内在规定: does not pertain to usefulness - Biocentrism is the philosophy that all living things have intrinsic value, regardless of their instrumental value. B. Anthropocentrism 人类中心说 It exists for only one purpose: to provide material gratification to humans. - Important distinguish between anthropocentrism from utilitarianism  Utilitarianism: regard to the environment emphasizes the well-being people attain from the environment, whether it be materialistic or spiritual, instrumental or intrinsic.  Anthropocentrism: the strictest definition of anthropocentrism places only instrumental value on the environment. C. Precautionary principle 预防原则 - Safe minimum standard: take actions not based on maximizing the upside but rather based on minimizing the downside - The safe minimum standard and the precautionary principle apply when there is uncertainty and irreversibility. - The basic principle is to err on the side of precaution. D. Sustainability 永续性,持续性 Social choice from individual values A. The utility function - Society consists N individuals, each of whom consumes a market good & an environmental good. - Market good: x(a composite of all conventional market goods the individual consumes) - Individual consumption: x i - Environmental quality (composite): e [Everyone must consume the same amount of environmental quality; it is a pure public good] - Individual views the benefits provided by the market good and the environmental good: U i(utility function) - Individual i will only care about his or her own consumption, utility = U ix ,i)  Individual levels of the market good and the quantity of the environmental good a  (x 1..., N ,e) a: societal consumption bundle; represents the N values of consumption of the market good for the N individuals plus the level of environmental quality, the same amount of which is consumed by each individual. Individuals have preferences that are represented by their utility function. Figure above shows a set of indifference curves for which the environment becomes more and more important as consumption of x increases. For low levels of x, environmental quality must increase substantially to offset a loss in material goods. For higher levels of x, a substantial increase in material goods is necessary to offset a small loss in environmental quality. Trading-off x and e Pure biocentrists have utility functions that permit no substitution of x for e. An extreme anthropocentrist may have a utility function that allows no substitution of e for x. B. Voting as a social choice mechanism Two “bundles” of material goods and environmental goods: a' ((x ',..., x ',e') and a" (x ",..., x ",e") 1 N 1 N a’ may involve much more material goods and less environmental quality than a”, which should society – a’ or
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