One Person One Vote and One Yen One Vote
Last time I asked the following question. If one person repaints the wall of her or his house a shade of red that she or he likes more than the original white, can the society in which this wall becomes red be said to be a “better society” if it gives other people an unpleasant feeling or causes them a loss?
Let’s assume a society consisting of 5 persons: 1 building owner and her or his 4 neighbors. In this society, the payoff (benefit) of making the building’s wall red are as follows: +2 million yen for the building owner, −1 million yen for neighbor 1, −0.3 million yen for neighbor 2, −0.2 million yen for neighbor 3, and −0.1 million yen for neighbor 4. The neighbors who suffer losses have thus received a negative payoff. Based on the payoff alone, when people judge the policy of making this wall red, there is one building owner in favor and four neighbors against. Therefore, in the case of majority rule of “one person one vote”, this policy would be rejected.
However, according to the concept of “one yen one vote”, this policy would be passed because there are +2 million yen in favor and -1.6 million yen in opposition. The net benefit that this policy brings to society as the whole is 0.4 (= 2−1.6) million yen, so this policy is desirable from the point of view of the whole society. This policy evaluation based on “one yen one vote” is therefore a value judgment based on the compensation principle or utilitarianism.
If the total gains of the people who are in favor exceed the total losses of the people who are against, the compensation principle judges that a better society will be realized by the implementation of the policy. If the total gains still exceed the amount of compensation, even after compensation is given to the people who incur losses, a Pareto improvement is possible in the sense that some people will be better off without making any member of society worse off. In this way, the compensation principle leads to utilitarianism in that it is desirable to maximize the social net benefit.
However, the policy evaluation based on “one yen one vote” leads to a solution of the problem by using money, even if each person honestly expresses her or his payoff, but it does not consider the fairness of income distribution. On the other hand, a policy evaluation which is based on “one person one vote” generates the problem of “political externality” in which minorities must follow the majority’s decisions. Which policy evaluation would you choose?
(Author: Akira Yokoyama)
This essay is the English version of No. 7, May 7, 2019 on the Japanese website.