By Aarushi Bansal
In the global pandemic battleground, the battle of ethics and moral principles arises as policymakers consider a trade-off: health of citizens or health of economics? Lives or Livelihoods? The palpable response- the health of citizens. The health of citizens seems ideal, but why are countries prioritizing the economy over people then? As a mere citizen, it may seem morally wrong, but this tilt in the “priority” of some governments is based on simple behavioral economic principles for a maximization utility of “happiness.” In other words, rationality assumptions- or rational decision making, the basis on which our world orders functions.
Economists say that Covid-19 makes us face uncertainty, not risk. The major difference: while risk has a known probability distribution, which can be “equally” used by everyone, uncertainty (Covid-19) has a subjective probability distribution, meaning that it varies from individual to individual. In either of the cases, the aim is to maximize payoffs and have marginal “additional” utility.
With uncertainty, the problem may not be taking the most rational assumption, but the mere fact of the subjectiveness of this situation and how varied the probabilities of rational assumptions are from individual to individual in order to maximize payoffs.
For example, let’s take two individuals- person X and person Y. During the pandemic, person X, a middle-class individual, has a fixed income and a high life expectancy of 80 plus. Person Y, an individual living in the slums, is one with fluctuating income levels, one who is more prone to water-borne diseases, and has a relatively lower life expectancy of 60, even before the pandemic. Now, for person X, in terms of maximizing utility, higher strings are attached to the loss of life than to that of livelihood; hence, person X would prioritize “lives.” In contrast, for person Y, higher strings are attached to the loss of livelihoods that to the probability of death from Covid-19; hence, person Y would prioritize “livelihoods.” This in its simplicity, explains the complexity of subjective probability. Both the approaches are rational but diametrically opposing. Person X, prioritizing “lives,” would want the lockdown to continue, while person Y, prioritizing “livelihoods,” would want the lockdown to be lifted.
What is the “fair” choice then? How do we balance the “rational” and the “other rational” choice?
This in its entirety explains the “fair” aspect of decisions made by policymakers for the collective utility. In day-to-day operations, this trade-off of lives vs. livelihoods in an individual choice, hence the individual has the “power” to be an optimizing individual in their belief, with a less significant opportunity cost. However, in the case of the pandemic, policymakers, though considering differential individual preferences, to some extent have to lean on to a rather outdated model- social choice theory. Social choice theory combines individual preference- the basic flaw in this theory- to reach a collective decision or social welfare. Now, this may seem ideal, however, in the hurly-burly world, we as humans cannot be defined by a single choice.
But this is what the world has brought upon us during the pandemic- the question of what the “fair” choice is for the “collective” good.
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