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2.4.04

Diminishing Returns Or Aggravation?

One of the basic assumptions made in utilitarian theory is diminishing returns -- the plausible idea that the more you have, the more you need to get to increase your wellbeing by the same amount, often stated as "getting a dollar increases my happiness by more than the same dollar would increase Bill Gates's happiness." The appeal of this idea is that it justifies egalitarian wealth distribution without adding any sort of exogenous equity criterion to the basic utility maximization rule.

I wonder if it would make sense to say that there's a similar principle of diminishing returns for burdens as well. The thought came up in the context of siting noxious facilities. If I'm already exposed to the risk from a nuclear waste facility, would it hurt me less to have a second waste facility installed than it would hurt you to have the first waste facility built in your pristine environment? The same principle that encourages equity in distributing benefits would then encourage concentration in burdens.

One might argue that burdens do not necessarily experience diminishing returns. They may in fact aggravate each other, so that the effect of living next to two hazardous facilities is more than double that of living next to one. This effect may be created in part by thresholds. Consider having a certain amount of cutting done to your wrist. I'd rather have a hundred papercuts spaced out over time than one giant gash. The papercuts are individually small enough that they heal -- the system takes a small burden and turns it into a zero burden. On the other hand, the gash may very well overload the healing system and kill me. In this sort of case, if you can distribute the burdens widely, you can effectively decrease the total.

The same might also be said of benefits, though. Say the only use I have for money is to buy a $1 hamburger. If you give me a penny, you might as well have not given me anything -- indeed, the same goes for any amount up to $.99. So if you have a dollar to distribute among 100 such people, it makes utilitarian sense to do some triage and give it all to one person so that they can get a hamburger, rather than distribute it equally and have nobody get anything.

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