Marginal Utility in International Context

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Mao, Chad (wikimedia)

Mao, Chad (wikimedia)

It’s worth saying explicitly that the points I was making yesterday about the egalitarian implications of the declining marginal utility of money apply even more forcefully to the international context. An extra $1,000 a year in income for a developed world lawyer is doing a lot less to enhance human welfare than is an extra $1,000 a year in income for a person currently getting by on $1 a day. I think one has to be realistic about the level of concern for foreigners that it’s reasonable to expect a given government to manifest, but also important to try to expand the bounds of people’s consciousness with regard to these kind of things.

Foreign aid is normally what comes to people’s minds immediately when they think about the global poor. But it’s also worth considering the impact of our immigration policy (quite positive compared to most other developed nations), our trade policy (not so hot), and our approach to climate change. As I’ve observed before, the conventional way of doing cost-benefit analysis has the perverse effect of weighting harms to rich people more heavily than harms to poor people when if anything it should be done the other way ’round. If you ruin the livelihood of a professional political blogger living in the USA, he’ll probably find another job to do. Certainly he won’t starve to death. If you ruin the land of a third world farmer living near the margin of subsistence, the alternatives are incredibly bleak.