3. The Concept of Utility
Societal Utility
How visible inequality damages overall societal cohesion.
The final evolution in measuring wellbeing is Societal Utility. This metric acknowledges that citizens do not just evaluate their own circumstances; they observe the entire distribution of wellbeing across society.
Humans exhibit significant wellbeing inequality aversion. Even if a person's personal utility is relatively high, living in a visibly unequal society causes psychological distress, lowering overall cohesion and happiness.
Side Note: Eliciting Public Preferences
Recent research demonstrates that the public heavily penalises inequality. When asked to evaluate policy, citizens consistently value moving someone out of deprivation significantly more than increasing the wealth of those already comfortable.
By optimising for a National Fairness Index rather than just an average, governments can construct policies that promote sustainable, inclusive growth.