American Economic Association

Some Reasons for the Maximin Criterion Author(s): John Rawls Source: The American Economic Review, Vol. 64, No. 2, Papers and Proceedings of the Eightysixth Annual Meeting of the American Economic Association (May, 1974), pp. 141-146 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/1816033 . Accessed: 26/10/2011 07:33
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CONCEPTSOF DISTRIBUTIONAL EQUITY

Some Reasons for the

Maximin

Criterion

By JOHN RAWLS*

Recently the maximin criterion of distributive equity has received some attention from economists in connection with the problem of optimal income taxation.1 Unhappily I am unable to examine the merits of the criterion from the standpoint of economic theory, although whether the criterion is a reasonable distributive standard depends importantly on the sort of examination that only economists can undertake. What I shall do is to summarize briefly some of the reasons for taking the maximin criterion seriously. I should emphasize that the maximin equity criterion and the socalled maximin rule for choice under uncertainty are two very different things. I shall formulate the reasons for the equity criterion so that they are completely independent from this rule. In A Theory of Justice I have considered the maximin criterion as part of a social contract theory. Here I must assume a certain familiarity with this conception.2 One feature of it might be put this way: injustice exists because basic agreements are made too late (Richard Zeckhauser). People already know their social positions and relative strength in bargaining, their
* Professor of philosophy, Harvard University. I am grateful to Robert Cooter and Richard Zeckhauser for their very instructive comments which enabled me to improve these remarks and saved me fronm several mistakes. I See A. B. Atkinson, Martin Feldstein, Y'oshitaka Itsumi, and Edmund S. Phelps. 2 In economics this sort of theory was reintroduced by James Buchanan and Gordon Tullock. 141

abilities and preferences, and these contingencies and knowledge of them cumulatively distort the social system. In an attempt to remedy this difficulty, contract theory introduces the notion of the original position. The most reasonable principles of justice are defined as those that would be unanimously agreed to in an appropriate initial situation that is fair between individuals conceived as free and equal moral persons. In order to define the original position as fair in this sense, we imagine that everyone is deprived of certain morally irrelevant information. They do not know their place in society, their class position or social status, their place in the distribution of natural assets and abilities, their deeper aims and interests, or their particular psychological makeup. Excluding this information insures that no one is advantaged or disadvantaged in the choice of principles by natural chance or social contingencies. Since all are in this sense similarly situated and no one knows how to frame principles that favor his particular condition, each will reason in the same way. Any agreement reached is unanimous and there is no need to vote. Thus the subject of the original agreement is a conception of social justice. Also, this conception is understood to apply to the basic structure of society: that is, to its major institutions-the political constitution and the principal economic
I

A similar idea is found in J. C. Harsanyi (1953).

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and social arrangements and how they fit together into one system. The application of the maximin criterion to optimal income taxation is, then, perfectly in order, since an income tax is part of the basic structure. But the maximin criterion is not meant to apply to small-scale situations, say, to how a doctor should treat his patients or a university its students.4 For these situations different principles will presumably be necessary. Maximin is a macro not a micro principle. I should add that the criterion is unsuitable for determining the just rate of savings; it is intended to hold only within generations (Rawls, sec. 44, pp. 291-92, Kenneth J. Arrow, 1973a, and Robert M. Solow). But what alternative conceptions are available in the original position? We must resort to great simplifications in order to get our bearings. We cannot consider the general case where the parties are to choose among all possible conceptions of justice; it is too difficult to specify this class of alternatives. Therefore we imagine that the parties are given a short list of conceptions between which they are to decide. Here I can discuss only two pair-wise comparisons. These are designed to reflect the traditional aim of contract theory, namely, to provide an account of justice that is both superior to utilitarianism and a more adequate basis for a democratic society. Therefore the first choice is between a conception defined by the principle that average utility is to be maximized and a conception defined by two principles that express a democratic idea of justice. These principles read as follows: 1. Each person has an equal right to the most extensive scheme of equal basic liberties compatible with a similar scheme of liberties for all.
I This affects the force of Harsanyi's counterexamples (Harsanyi, 1973).

2. Social and economic inequalities are to meet two conditions: they must be (a) to the greatest expected benefit of the least advantaged members of society (the maximin equity criterion) and (b) attached to offices and positions open to all under coInditions of fair equality of opportunity. I assume that the first of these takes priority over the second, but this and other matters must be left aside. (For more on this, see Rawls, pp. 40-45 and 62-65.) For simplicity I also assume that a person's utility is affected predominantly by liberties and opportunities, income and wealth, and their distribution. I suppose further that everyone has normal physical needs so that the problem of special health care does not arise. Now which of these conceptions would be chosen depends on how the persons in the original position are conceived. Contract theory stipulates that they regard themselves as having certain fundamental interests, the claims of which they must protect, if this is possible. It is in the name of these interests that they have a right to equal respect and consideration in the design of society. The religious interest is a familiar historical example; the interest in the integrity of the person is another. In the original position the parties do not know what particular form these interests take. But they do assume that they have such interests and also that the basic liberties necessary for their protection (for example, freedom of thought and liberty of conscience, freedom of the person, and political liberty) are guaranteed by the first principle of justice. Given these stipulations, the two princiI Part of the justification for these assumptions is given by the notion of primary goods. See Rawls, sec. 15. Of course, there are still difficulties (Arrow, 1973b, 1) 254).

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ples of justice would be chosen. For while the principle of utility may sometimes lead to a social order securing these liberties, there is no reason why it will do so in general. And even if the principle often does, it would be pointless to run the risk of encountering circumstances when it does not. Put formally, each must suppose that the marginal utility of these fundamental interests is infinite; this requires anyone in the original position to give them priority and to adopt the two principles of justice. This conclusion is strengthened when one adds that the parties regard themselves as having a higher-order interest in how their other interests, even fundamental ones, are regulated and shaped by social institutions. They think of themselves as beings who can choose and revise their final ends and who must preserve their liberty in these matters. A free person is not only one who has final ends which he is free to pursue or to reject, but also one whose original allegiance and continued devotion. to these ends are formed under conditions that are free. Since the two principles secure these conditions, they must be chosen. The second pair-wise comparison is far more difficult. In this case the choice is between the two principles of justice and a variant of these principles in which the utility principle has a subordinate place. To define this variant, replace the second principle by the following: social and economic inequalities are to be adjusted so as to maximize average utility consistent with fair equality of opportunity. The choice between this variant and the two principles is more delicate because the arguments from liberty can no longer be made, at least not so directly. The first principle belongs to both conceptions, and so the operation of the utility principle is hedged by basic rights as well as fair equality of opportunity. One reason favoring the two principles

of justice is this. From the standpoint of the original position, the parties will surely be very considerably risk-averse; if we ask how risk-averse, we might say not less than that of most any normal person. Of course, this is extremely vague; but if we assume that utility is estimated from the standpoint of individuals in society and represents, as the classical utilitarians believed, a quantity ascertainable independent of choices involving risk, then, given the crucial nature of the decision in the original position, the claims of the utility principle seem quite dubious. On the other hand, if we suppose that utility is measured from the original position and takes account of risk, the utility criterion may not differ much from maximin. The standard of utility approaches maximin as risk aversion increases without limit (Arrow, pp. 256-57). So, either way, the original position pushes us toward maximin. However, in weighing the second pair-wise comparison, I assume that, based on considerations of risk aversion alone, there is a significant difference between the two conceptions. Thus the problem is to identify other attractive features of the maximin criterion that tip the balance of reasons in its favor. First, much less information is needed to apply the maximin criterion. Once the least-favored group is identified, it may be relatively easy to determine which policies are to their advantage. By comparison it is much more difficult to know what maximizes average utility. We require a fairly precise way of comparing the utilities of different social groups by some meaningful standard, as well as a method of estimating the overall balance of gains and losses. In application this principle leaves so much to judgment that some may reasonably claim that the gains of one group outweigh the losses of another, while others may equally reasonably deny it. This situation gives those favored by

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existing inequalities an opportunity to exploit their advantage so that, as a result, inequalities are likely to be excessive, undermining the justice of the system. A further consideration is this: a distributive criterion is to serve as a public principle. Citizens generally should be able to understandit and have some confidence that it is realized. Pattern criteria, those that require the actual distribution to exhibit certain ascertainable features, do well by the test of publicity. Of these, strict equality (equal division) is the sharpest principle. The trouble with pattern criteria is that sharpness is not the only desideratum, and they often have little else to commend them. On the other hand, the utility principle is not sharp enough: even if it were satisfied, there could be little public confidence that this is indeed the case. The maximin criterion has sufficient sharpness; at the same time it is efficient while strict equality is not. Another ground supporting the maxi. min criterion is based on the strains of commitment: in the original position the parties are to favor those principles compliance with which should prove more tolerable, whatever their situation in society turns out to be. The notion of a contract implies that one cannot enter into an agreement that one will be unable to keep. By this test, also, maximin seems superior, for the principles chosen would regulate social and economic inequalities in the basic structure of society that affect people'slife-prospects.These are peculiarly deep and pervasive inequalities and often hard to accept. Looking first at the situation of the less advantaged, the utility principleasks them to view the greater advantages of others who have more as a sufficient reason for having still lower prospects of life than otherwise they could be allowed. This is an extreme demand psychologically; by contrast, the maximin criterion assures the

less favored that inequalities work to their advantage. The problem with maximin would appear to lie with those who are better situated. They must accept less than what they would receive with the utility principle, but two things greatly lessen their strains of commitment: they are, after all, more fortunate and enjoy the benefits of that fact; and insofar as they value their situation relatively in comparison with others, they give up that much less. In fact, our tendency to evaluate our circumstances in relation to the circumstances of others suggests that society should be arrangedso that if possible all its members can with reason be happy with their situation. The maximin criterion achieves this better than the principle of utility. I have noted several reasons that support the maximin criterion: very considerable normal risk-aversion (given the special features of the original position), less demanding information requirements, greater suitability as a public principle, and weaker strains of commitment. Yet no one of them is clearly decisive by itself. Thus the question arises whether there is any consideration that is compelling. I want to suggest that the aspirations of free and equal personality point directly to the maximin criterion. Since the principles of equal liberty and fair equality of opportunity are common to both alternatives in the second comparison, some form of democracy obtains when either alternative is realized.Citizens are to view themselves as free and equal persons; social institutions should be willingly complied with and recognized as just. Presumably, however, certain social and economic inequalities exist, and individuals' life-prospects are significantly affected by their family and class origins, by their niaturalendowments, and by chance contingenciesover the course of their lives. We must ask: In the light of what principle

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can free and equal moral persons permit their relations to be affected by social fortune and the natural lottery? Since no one deserves his place in the distribution of talents, nor his starting place in society, desert is not an answer. Yet free and equal persons want the effects of chance to be regulated by some principle, if a reasonable principle exists. Now when the maximin criterion is followed, the natural distribution of abilities is viewed in some respects as a collective asset. While an equal distribution might seem more in keeping with the equality of free moral persons, at least if the distribution were a matter of choice, this is not a reason for eliminating natural variations, much less for destroying unusual talents. To the contrary, natural variations are recognized as an opportunity, particularly since they are often complementary and form a basis for social ties. Institutions are allowed to exploit the full range of abilities provided the resulting inequalities are no greater than necessary to produce corresponding advantages for the less fortunate. The same constraint holds for the inequalities between social classes. Thus at first sight the distribution of natural assets and unequal life-expectations threatens the relations between free and equal moral persons. But provided the maximin criterion is satisfied, these relations may be preserved: inequalities are to everyone's advantage and those able to gain from their good fortune do so in ways agreeable to those less favored. Meeting this burden of proof reflects the value of equality. Now the maximin criterion would conform to the precept "from each according to his abilities, to each according to his needs" if society were to impose a head tax on natural assets. In this way income inequalities could be greatly reduced if not eliminated. Of course, there are enormous practical difficulties in such a scheme; ability may be impossible to measure and

individuals would have every incentive to conceal their talents. But another difficulty is the interference with liberty; greater natural talents are not a collective asset in the sense that society should compel those who have them to put them to work for the less favored. This would be a drastic infringement upon freedom. But society can say that the better endowed may improve their situations only on terms that help others. In this way inequalities are permitted in ways consistent with everyone's self-respect. I have attempted a brief survey of the grounds for the maximin criterion. I have done this because historically it has attracted little attention, and yet it is a natural focal point between strict equality and the principle of average utility. It turns out to have a number of attractive features. But I do not wish to overemphasize this criterion: a deeper investigation covering more pair-wise comparisons may show that some other conception of justice is more reasonable. In any case, the idea that economists may find most useful in contract theory is that of the original position. This perspective can be defined in various ways and with different degrees of abstraction and some of these may prove illuminating for economic theory.6 REFERENCES K. J. Arrow, "Rawls's Principle of Just Saving," Instit. for Math. Stud. in the Soc. Sciences, Stanford, tech. rep. no. 106, Sept. 1973a. "Some Ordinalist-Utilitarian Notes on Rawls's Theory of Justice," J. Phil.,
May 1973b, 70, 254.

A. B. Atkinson, "How Progressive Should Income Tax Be?" in J. M. Parkin, ed., Essays in Modern Economics, London 1973. J. Buchanan and G. Tullock, The Calculus of Consent, Ann Arbor 1962.
6 See Zeckhauser for an illustration of the use of this sort of framework.

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M. Feldstein, "On the Optimal Progressivity of the Income Tax," Harvard Instit. of Econ. Res., disc. pap. 309, July 1973. J. C. Harsanyi, "Cardinal Utility in Welfare Economics and in the Theory of Risk Taking," J. Polit. Econ., Oct. 1953, 61, 434-35. ,"Canthe Maximin Principle Serve as a Basis for Morality?" Center for Res. in Manage. Sc., Berkeley, work. pap. no. CP351, May 1973, 8-9. Y. Itsumi, "Distributional Effects of Income Tax Schedules," Rev. Econ. Stud., forthcoming.

E. S. Phelps, "The Taxation of Wage Income for Economic Justice," Quart. J. Econ., Aug. 1973, 87, 331-54. J. Rawls, A Theory of Justice, Cambridge, Mass. 1971. R. M. Solow, "Intergenerational Equity and Exhaustible Resources," dept. of econ., work. pap. no. 103, Cambridge, Mass. Feb. 1973. R. Zeckhauser, "Risk Spreading and Distribution," in H. M. Hochman and G. E. Peterson, eds., Political Economics of Income Distribution, New York 1974.