Ethical rules, decision-making and finances in United States

The individual may recognize full well that there is a conflict between his behavior as a private decision-maker and that behavior which, if generalized to all persons, would produce results more desirable to him. But, in his private capacity through which he must act, there may be no means for the individual to influence the behavior of others, at least directly. Hence, it remains rational for the individual to do the best that he can under the circumstances.

For a general discussion that introduces several helpful examples, see Thomas C. Schelling, “The Ecology of Micromotives,” Public Interest 25 (Fall 1971): 59-98. Also see his “Hockey Helmets, Concealed Weapons, and Daylight Saving,” Discussion Paper No. 9, Public Policy Program (John F. Kennedy School of Government, Harvard University, July 1972). For a discussion applied to ethical standards, see the author “Ethical Rules, Expected Values, and Large Numbers.”

Any observed public-goods provision and financing can be interpreted as embodying some mixture of efficiency and equity results.

For a development of this approach, see H. Aaron and M. McGuire, “Public Goods and Income Distribution,” Econometrica 38 (November 1970): 907-20; M. McGuire and H. Aaron, “Efficiency and Equity in the Optimal Supply of a Public Good,” Review of Economics and Statistics 51 (February 1969): 31-39. See also William H. Breit, “Income Redistribution and Efficiency Norms” (Paper presented at Urban Institute Conference on Income Redistribution, 1972, forthcoming in conference proceedings volume).

Buchanan, James M. The Limits of Liberty: Between Anarchy and Leviathan. Indianapolis, IN: Liberty Fund, Inc. 1999. Library of Economics and Liberty [Online] available from http://www.econlib.org/library/Buchanan/buchCv7c7.html; accessed 21 August 2012; Internet