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American Economic Association

Some Reasons for the Maximin CriterionAuthor(s): John RawlsSource: The American Economic Review, Vol. 64, No. 2, Papers and Proceedings of the Eighty-sixth Annual Meeting of the American Economic Association (May, 1974), pp. 141-146Published by: American Economic AssociationStable URL: http://www.jstor.org/stable/1816033 .

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CONCEPTSOF DISTRIBUTIONALEQUITYS o m e R e a s o n s f o r t h e

Maximin CriterionBy JOHN RAWLS*

Recently the maximin criterion of dis-tributive equity has received some atten-tion from economists in connection withthe problem of optimal income taxation.1Unhappily I am unable to examine themerits of the criterion from the standpointof economic theory, although whether thecriterion is a reasonable distributive stan-dard depends importantly on the sort ofexamination that only economists can un-dertake.What I shall do is to summarize brieflysome of the reasons for taking the maximincriterion seriously. I should emphasize thatthe maximin equity criterion and the so-called maximin rule for choice under un-certainty are two very different things. Ishall formulate the reasons for the equitycriterion so that they are completely inde-pendent from this rule.In A Theory of Justice I have consideredthe maximin criterion as part of a socialcontract theory. Here I must assume acertain familiarity with this conception.2One feature of it might be put this way:injustice exists because basic agreementsare made too late (Richard Zeckhauser).People already know their social positionsand relative strength in bargaining, their

abilities and preferences, and these con-tingencies and knowledge of them cumula-tively distort the social system. In an at-tempt to remedy this difficulty, contracttheory introduces the notion of the originalposition. The most reasonable principlesof justice are defined as those that wouldbe unanimously agreed to in an appropri-ate initial situation that is fair betweenindividuals conceived as free and equalmoral persons.In order to define the original positionas fair in this sense, we imagine that every-one is deprived of certain morally irrele-vant information. They do not know theirplace in society, their class position orsocial status, their place in the distributionof natural assets and abilities, their deeperaims and interests, or their particular psy-chological makeup. Excluding this infor-mation insures that no one is advantagedor disadvantaged in the choice of princi-ples by natural chance or social contin-gencies. Since all are in this sense similarlysituated and no one knows how to frameprinciples that favor his particular condi-tion, each will reason in the same way.Any agreement reached is unanimous andthere is no need to vote.Thus the subject of the original agree-ment is a conception of social justice.Also, this conception is understood to ap-ply to the basic structure of society: thatis, to its major institutions-the politicalconstitution and the principal economic

* Professor of philosophy, Harvard University. I amgrateful to Robert Cooter and Richard Zeckhauser fortheir very instructive comments which enabled me toimprove these remarks and saved me fronmseveralmistakes.I See A. B. Atkinson, Martin Feldstein, Y'oshitakaItsumi, and Edmund S. Phelps.2 In economics this sort of theory was reintroducedby James Buchanan and Gordon Tullock. I A similar idea is found in J. C. Harsanyi (1953).

141

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142 AMERICAN ECONOMIC ASSOCIATION MAY 1974and social arrangements and how theyfit together into one system. The applica-tion of the maximin criterion to optimalincome taxation is, then, perfectly in order,since an income tax is part of the basicstructure. But the maximin criterion is notmeant to apply to small-scale situations,say, to how a doctor should treat his pa-tients or a university its students.4 Forthese situations different principles willpresumably be necessary. Maximin is amacro not a micro principle. I should addthat the criterion is unsuitable for deter-mining the just rate of savings; it is in-tended to hold only within generations(Rawls, sec. 44, pp. 291-92, Kenneth J.Arrow, 1973a, and Robert M. Solow).But what alternative conceptions areavailable in the original position? Wemust resort to great simplifications inorder to get our bearings. We cannot con-sider the general case where the parties areto choose among all possible conceptionsof justice; it is too difficult to specify thisclass of alternatives. Therefore we imaginethat the parties are given a short list ofconceptions between which they are to de-cide.Here I can discuss only two pair-wisecomparisons. These are designed to reflectthe traditional aim of contract theory,namely, to provide an account of justicethat is both superior to utilitarianism anda more adequate basis for a democratic so-ciety. Therefore the first choice is betweena conception defined by the principle thataverage utility is to be maximized and aconception defined by two principles thatexpress a democratic idea of justice. Theseprinciples read as follows:

1. Each person has an equal right to themost extensive scheme of equal basicliberties compatible with a similarscheme of liberties for all.

2. Social and economic inequalities areto meet two conditions: they must be(a) to the greatest expected benefitof the least advantaged members ofsociety (the maximin equity cri-terion) and (b) attached to officesand positions open to all under coIn-ditions of fair equality of opportu-nity.

I assume that the first of these takes prior-ity over the second, but this and othermatters must be left aside. (For more onthis, see Rawls, pp. 40-45 and 62-65.) Forsimplicity I also assume that a person'sutility is affected predominantly by liber-ties and opportunities, income and wealth,and their distribution. I suppose furtherthat everyone has normal physical needsso that the problem of special health caredoes not arise.Now which of these conceptions wouldbe chosen depends on how the persons inthe original position are conceived. Con-tract theory stipulates that they regardthemselves as having certain fundamentalinterests, the claims of which they mustprotect, if this is possible. It is in the nameof these interests that they have a right toequal respect and consideration in the de-sign of society. The religious interest is afamiliar historical example; the interest inthe integrity of the person is another.In the original position the parties do notknow what particular form these intereststake. But they do assume that they havesuch interests and also that the basicliberties necessary for their protection (forexample, freedom of thought and libertyof conscience, freedom of the person, andpolitical liberty) are guaranteed by thefirst principle of justice.Given these stipulations, the two princi-

I This affects the force of Harsanyi's counterexamples(Harsanyi, 1973).

I Part of the justification for these assumptions isgiven by the notion of primary goods. See Rawls, sec.15. Of course, there are still difficulties (Arrow, 1973b,1) 254).

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VOL. 64 NO. 2 CONCEPTS OF DISTRIBUTIONAL EQUITY 143ples of justice would be chosen. For whilethe principle of utility may sometimeslead to a social order securing these liber-ties, there is no reason why it will do so ingeneral. And even if the principle oftendoes, it would be pointless to run the riskof encountering circumstances when it doesnot. Put formally, each must suppose thatthe marginal utility of these fundamentalinterests is infinite; this requires anyone inthe original position to give them priorityand to adopt the two principles of justice.This conclusion is strengthened whenone adds that the parties regard them-selves as having a higher-order interest inhow their other interests, even fundamen-tal ones, are regulated and shaped by so-cial institutions. They think of themselvesas beings who can choose and revise theirfinal ends and who must preserve theirliberty in these matters. A free person isnot only one who has final ends which he isfree to pursue or to reject, but also onewhose original allegiance and continueddevotion. to these ends are formed underconditions that are free. Since the twoprinciples secure these conditions, theymust be chosen.The second pair-wise comparison is farmore difficult. In this case the choice is be-tween the two principles of justice and avariant of these principles in which theutility principle has a subordinate place.To define this variant, replace the secondprinciple by the following: social and eco-nomic inequalities are to be adjusted so asto maximize average utility consistentwith fair equality of opportunity. Thechoice between this variant and the twoprinciples is more delicate because thearguments from liberty can no longer bemade, at least not so directly. The firstprinciple belongs to both conceptions, andso the operation of the utility principle ishedged by basic rights as well as fairequality of opportunity.One reason favoring the two principles

of justice is this. From the standpoint ofthe original position, the parties will surelybe very considerably risk-averse; if we askhow risk-averse, we might say not less thanthat of most any normal person. Of course,this is extremely vague; but if we assumethat utility is estimated from the stand-point of individuals in society and repre-sents, as the classical utilitarians believed,a quantity ascertainable independent ofchoices involving risk, then, given thecrucial nature of the decision in the origi-nal position, the claims of the utility prin-ciple seem quite dubious. On the otherhand, if we suppose that utility is mea-sured from the original position and takesaccount of risk, the utility criterion maynot differ much from maximin. The stan-dard of utility approaches maximin as riskaversion increases without limit (Arrow,pp. 256-57). So, either way, the originalposition pushes us toward maximin. How-ever, in weighing the second pair-wisecomparison, I assume that, based on con-siderations of risk aversion alone, thereis a significant difference between the twoconceptions. Thus the problem is to iden-tify other attractive features of the maxi-min criterion that tip the balance ofreasons in its favor.First, much less information is needed toapply the maximin criterion. Once theleast-favored group is identified, it may berelatively easy to determine which policiesare to their advantage. By comparison it ismuch more difficult to know what maxi-mizes average utility. We require a fairlyprecise way of comparing the utilities ofdifferent social groups by some meaning-ful standard, as well as a method of esti-mating the overall balance of gains andlosses. In application this principle leavesso much to judgment that some mayreasonably claim that the gains of onegroup outweigh the losses of another,while others may equally reasonably denyit. This situation gives those favored by

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144 AMERICANECONOMICASSOCIATION MAY 1974existing inequalitiesan opportunity to ex-ploit their advantage so that, as a result,inequalities are likely to be excessive, un-derminingthe justice of the system.A further consideration is this: a dis-tributive criterion is to serve as a publicprinciple. Citizens generally shouldbe ableto understand t and have some confidencethat it is realized. Pattern criteria, thosethat require the actual distribution to ex-hibit certain ascertainable features, dowell by the test of publicity. Of these,strict equality (equal division) is thesharpest principle. The trouble with pat-tern criteria is that sharpness is not theonly desideratum, and they often havelittle else to commend them. On the otherhand, the utility principle is not sharpenough: even if it were satisfied, therecould be little public confidence that thisis indeed the case. The maximin criterionhas sufficient sharpness;at the same timeit is efficient while strict equality is not.Another ground supporting the maxi.min criterion is based on the strains ofcommitment: in the original position theparties are to favor those principles com-pliance with which should prove moretolerable, whatever their situation in so-ciety turns out to be. The notion of a con-tract impliesthat one cannot enter into anagreementthat one will be unable to keep.By this test, also, maximinseems superior,for the principles chosen would regulatesocial and economic inequalities in thebasic structure of society that affectpeople's ife-prospects.These arepeculiarlydeep and pervasive inequalities and oftenhard to accept.Lookingfirst at the situation of the lessadvantaged,the utility principleasks themto view the greater advantages of otherswho have more as a sufficient reason forhaving still lower prospects of life thanotherwisethey could be allowed. This is anextreme demand psychologically; by con-trast, the maximin criterion assures the

less favored that inequalities work to theiradvantage. The problem with maximinwould appear to lie with those who arebetter situated. They must accept less thanwhat they would receive with the utilityprinciple, but two things greatly lessentheir strains of commitment: they are,after all, more fortunate and enjoy thebenefits of that fact; and insofar as theyvalue their situation relatively in compari-son with others, they give up that muchless. In fact, our tendency to evaluate ourcircumstances in relation to the circum-stances of others suggests that societyshouldbe arrangedso that if possible all itsmembers can with reason be happy withtheir situation. The maximin criterionachieves this better than the principle ofutility.I have noted several reasons that sup-port the maximin criterion: very con-siderable normal risk-aversion(given thespecial features of the original position),less demandinginformation requirements,greater suitability as a public principle,and weakerstrainsof commitment. Yet noone of them is clearly decisive by itself.Thus the question arises whether there isany consideration that is compelling. Iwant to suggest that the aspirations offree andequalpersonality point directly tothe maximin criterion.Since the principlesof equal liberty andfair equality of opportunity are commonto both alternatives in the second com-parison, some form of democracy obtainswhen either alternativeis realized. Citizensare to view themselves as free and equalpersons; social institutions should bewillingly complied with and recognizedasjust. Presumably, however, certain socialand economic inequalities exist, and indi-viduals' life-prospectsare significantlyaf-fected by their family and class origins, bytheir niatural ndowments,and by chancecontingenciesover the courseof theirlives.We must ask: In the light of what principle

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VOL. 64 NO. 2 CONCEPTS OF DISTRIBUTIONAL EQUITY 14Scan free and equal moral persons permittheir relations to be affected by socialfortune and the natural lottery? Since noone deserves his place in the distribution oftalents, nor his starting place in society,desert is not an answer. Yet free and equalpersons want the effects of chance to beregulated by some principle, if a reasonableprinciple exists.Now when the maximin criterion is fol-lowed, the natural distribution of abilitiesis viewed in some respects as a collectiveasset. While an equal distribution mightseem more in keeping with the equality offree moral persons, at least if the distribu-tion were a matter of choice, this is not areason for eliminating natural variations,much less for destroying unusual talents.To the contrary, natural variations arerecognized as an opportunity, particularlysince they are often complementary andform a basis for social ties. Institutions areallowed to exploit the full range of abilitiesprovided the resulting inequalities are nogreater than necessary to produce corre-sponding advantages for the less fortunate.The same constraint holds for the inequali-ties between social classes. Thus at firstsight the distribution of natural assets andunequal life-expectations threatens the re-lations between free and equal moral per-sons. But provided the maximin criterionis satisfied, these relations may be pre-served: inequalities are to everyone's ad-vantage and those able to gain from theirgood fortune do so in ways agreeable tothose less favored. Meeting this burden ofproof reflects the value of equality.Now the maximin criterion would con-form to the precept "from each accordingto his abilities, to each according to hisneeds" if society were to impose a head taxon natural assets. In this way income in-equalities could be greatly reduced if noteliminated. Of course, there are enormouspractical difficulties in such a scheme;ability may be impossible to measure and

individuals would have every incentive toconceal their talents. But another difficultyis the interference with liberty; greaternatural talents are not a collective asset inthe sense that society should compel thosewho have them to put them to work forthe less favored. This would be a drasticinfringement upon freedom. But societycan say that the better endowed may im-prove their situations only on terms thathelp others. In this way inequalities arepermitted in ways consistent with every-one's self-respect.I have attempted a brief survey of thegrounds for the maximin criterion. I havedone this because historically it has at-tracted little attention, and yet it is anatural focal point between strict equalityand the principle of average utility. Itturns out to have a number of attractivefeatures. But I do not wish to overempha-size this criterion: a deeper investigationcovering more pair-wise comparisons mayshow that some other conception of justiceis more reasonable. In any case, the ideathat economists may find most useful incontract theory is that of the original po-sition. This perspective can be defined invarious ways and with different degrees ofabstraction and some of these may proveilluminating for economic theory.6

REFERENCESK. J. Arrow, "Rawls's Principle of Just Sav-ing," Instit. for Math. Stud. in the Soc.

Sciences, Stanford, tech. rep. no. 106, Sept.1973a. "Some Ordinalist-Utilitarian Noteson Rawls's Theory of Justice," J. Phil.,May 1973b, 70, 254.A. B. Atkinson, "How ProgressiveShould In-come Tax Be?" in J. M. Parkin,ed., Essaysin Modern Economics, London 1973.J. Buchanan and G. Tullock, The Calculus ofConsent, Ann Arbor 1962.

6 See Zeckhauser for an illustration of the use of thissort of framework.

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146 AMERICAN ECONOMIC ASSOCIATION MAY 1974M. Feldstein, "On the Optimal Progressivityof the Income Tax," Harvard Instit. ofEcon. Res., disc. pap. 309, July 1973.J. C. Harsanyi, "Cardinal Utility in WelfareEconomics and in the Theory of Risk Tak-ing," J. Polit. Econ., Oct. 1953, 61, 434-35.,"Can he Maximin Principle Serve asa Basis for Morality?" Center for Res. inManage. Sc., Berkeley, work. pap. no. CP-351, May 1973, 8-9.Y. Itsumi, "Distributional Effects of IncomeTax Schedules," Rev. Econ. Stud., forth-coming.

E. S. Phelps, "The Taxation of Wage Incomefor Economic Justice," Quart. J. Econ.,Aug. 1973, 87, 331-54.J. Rawls, A Theory of Justice, Cambridge,Mass. 1971.R. M. Solow, "IntergenerationalEquity andExhaustible Resources," dept. of econ.,work. pap. no. 103, Cambridge,Mass. Feb.1973.R. Zeckhauser, "Risk Spreadingand Distribu-tion," in H. M. Hochman and G. E. Peter-son, eds., Political Economics of IncomeDistribution, New York 1974.