Aggregation and Equality

Estimating aggregate health effects is indispensable if we are to understand the broad human consequences of economic activities.

However, the method has two significant deficiencies.

First, it ignores the injustice of unequal distribution: an economic change could increase aggregate health while decreasing the health of some individuals or groups.

Second, it ignores changes in population: an increase in aggregate health resulting solely from a population increase could mislead us into thinking that the economy has improved, even though individual health remains constant or declines.

In the present section population is assumed to be constant, but this assumption is dropped in ENL's discussion of that subject, for which the following discussion provides the necessary theoretical preparation.

Before proceeding, it must be pointed out that ENL's aggregate health maximization creates a strong and automatic tendency towards health equality.

Unlike monetary income or wealth, which in a capitalist economy can increase virtually without limit, an individual's health level has a strict upper bound due to the nature of the human body. Once the health of privileged individuals has been maximized, aggregate health can increase only by increasing the health of the less privileged.

Shifting the value and cost curves outward will therefore not only increase overall health, it will likely equalize it as well. Despite this inherent tendency, it remains possible for some individuals to be healthier than others, and equality must therefore be addressed as a distinct topic in the framework.

The ENL concept that addresses these issues is individual net gains (ING).

In general terms, this is the health gained or lost by an individual from engaging in economic activities. Specifically, ING is the difference between the effectual value gained by an individual through consumption and the input cost incurred by this same individual from production, over a specified period of time.

As an example, an individual might typically gain 500 health units per day from consumption, and lose 300 health units per day from production. This person's ING would thus be 200 health units per day.

Another individual might gain 400 health units per day from consumption, and gain another 200 health units per day from production. This person's ING would be 600 health units per day.

Because labor cost is typically incurred by workers, the determination of ING differs between workers and non-workers. For a worker, both labor cost and natural cost must be subtracted from effectual value to arrive at ING. For a non-worker, only natural cost must in general be subtracted.

This distinction is not a fine point — it highlights the fact that workers require specific protections from the health damage they might incur while engaged in production activities. Such protection should not be perceived as just a contractual right or a legal privilege, but as a clear consequence of ENL's economic principles and ethical stance.

It would be useful to have a measure for ING distribution in an economy. Fortunately, as with lost potential health, considerable work has already been done in this area. A widely used measure of inequality is the Gini coefficient, which is normally applied to income distributions.1

The coefficient was originally defined as a number between 0 and 1, with 0 indicating complete equality and 1 indicating complete inequality. It is now sometimes expressed as a percentage and called the Gini index.

The UN's Human Development Reports uses a third alternative: the organization uses the original term — Gini coefficient — and expresses it as a number between 0 and 100. This measure can be usefully applied to the distribution of individual net gains among an economy's individuals.

The ING concept allows for a more succinct definition of well-being, given as the maximization of effectual value, the minimization of input cost, and the satisfaction of all socially-approved wants.

Because ING includes the first two elements, the alternative definition for individuals is the maximization of their individual net gains and the satisfaction of all their socially-sanctioned wants.

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