Fairness and Inequality

Question 1

Principals of Fairness

Answer 1

1. Distributive Fairness
2. Procedural Fairness

Question 2

Distributive Fairness

Answer 2

Distributive fairness is about fair outcomes, not just equal ones.

True fairness balances equality with incentives, so people still have reasons to work, contribute, and improve.

Question 3

Procedural Fairness

Answer 3

Procedural fairness means the process is fair and just — people are treated equally under the rules, even if outcomes differ.

Question 4

Key Features of Procedural Fairness

Answer 4

Non-Coercion :

 - No individual is forced to act against their will.

  - Participation must be voluntary and free from 
    pressure or manipulation.

Equality of Opportunity:

 - Everyone must have the same chance to succeed.

  - The system must ensure fair access to resources, 
     education, jobs, or positions.

Question 5

Thomas Piketty – Two Policy Options to Reduce Inequality:

Answer 5

Direct Redistribution – Raise wages or labor income

Fiscal Redistribution – Tax capital (wealth, investments)

Question 6

Public Bad

Answer 6

A public bad is a condition or outcome that negatively affects society as a whole, not just individuals. These are the opposite of public goods — they are non-excludable and non-rival, but harmful.

Examples:

Pollution

Widespread crime

Extreme inequality that leads to unrest or revolution

Question 7

Dull Incentives

Answer 7

Dull incentives occur when policies (like heavy redistribution) weaken the motivation for people to work hard, take risks, or innovate, because effort and reward are no longer closely linked.

Examples: If everyone earns the same regardless of effort, fewer people strive to improve or produce more.

Question 8

The Social Contract

Answer 8

Individuals consent, either explicitly or tacitly, to
surrender some of their freedoms and submit to the
authority of the state, in exchange for protection of their remaining rights

The social contract justifies government authority as a mutual agreement: Individuals trade some freedom for the security and structure of society.

Question 9

Horizontal Equity

Answer 9

People who are alike in relevant ways should be treated the same.

Question 10

Vertical Equity

Answer 10

People who are different in relevant ways should be treated differently.

Vertical equity: Treat different people differently, when it’s fair to do so

Question 11

Veil of Ignorance – John Rawls

Answer 11

Rawls proposed that to decide what is truly fair, you must imagine yourself in the “original position”, behind a veil of ignorance — where you remove personal bias — and you make decisions as if you could end up in any possible position in society.

Question 12

Individual Sovereignty

Answer 12

Right to make personal choices, enter voluntary agreements, and consume according to personal preference.

Core to economic freedom and consumer sovereignty.

Western Societies

Question 13

Paternalism

Answer 13

Limiting someone’s freedom for their own good, even against their will.

Example: seatbelt laws, drug restrictions, or bans on dangerous products.

Question 14

Internality

Answer 14

An internality is a long-term cost or benefit that a person fails to fully consider when making a decision for themselves.

This happens when people act in ways that hurt their own future well-being, often due to addiction, lack of self-control, or short-term thinking.

Examples:

Narcotics: Addictive substances may feel good now, but cause long-term harm