We give an overview of the huge and increasing economic costs of dementia, both for the persons with dementia and for society as a whole. Public intervention is needed if we want to provide affordable and high-quality care to all persons with dementia. First, although an effective pharmaceutical cure for dementia would undoubtedly be a blockbuster drug for private companies, economic features of the production process of dementia medicines explain the relative underinvestment in private research. Second, there are no well-functioning private insurance markets for long-term care expenditures. Public intervention is needed to stimulate research, to finance care, to reduce inequalities in health and well-being, and address barriers to access to effective treatment and supportive care.

To evaluate psychological and psychosocial interventions or to decide whether it is cost-effective to reimburse specific therapies or medicines, one needs a measure of the quality of life of the persons with dementia. A large battery of specific dementia scales is available that can be used to evaluate psychological and psychosocial interventions, while cost-effectiveness is usually analysed with generic QALY-type health measures. The choice between these various measures cannot be made only on statistical or technical grounds because it has crucial ethical implications. Different measures of QoL reflect different fundamental perspectives on what makes a good life.

In this chapter, we provide a critical review of the literature on social progress from a prioritarian perspective. We give special attention to the choice of the measure of individual well-being and the aggregation method across individuals in our discussion of various methods that have been proposed in the literature. We present the “growth incidence curve” as a useful device to chart social progress. We illustrate with empirical results for Russia in the period 1995–2005.

We survey the empirical literature on ethical preferences, covering both survey studies and incentivized laboratory experiments. Crucial axioms such as the Pigou-Dalton transfer principle are not accepted by a large fraction of the subjects. Moreover, in formulating their distributive preferences, subjects attach much importance to the sources of income differences. Their preferences behind a veil of ignorance do not coincide with their preferences in the position of a social planner. These results suggest that prioritarian policy proposals will not necessarily be supported by a majority of the population. Although the majority opinion does not necessarily reflect the ethically desirable perspective, the empirical results still raise some interesting normative challenges

In many applications of the capability approach it is necessary to rank individuals with respect to their well-being. This raises the difficult question of how to select the weights to be attached to the relevant functionings or capabilities that constitute well-being. In this chapter, we explore the possibility of using individual valuations to set these weights and we propose to use equivalent income as a specific well-being measure that is consistent with these individual valuations. We discuss its implementation and compare the results to four alternative well-being measures based on Colombian data for 2008: income, subjective well-being, the official SISBEN index, and the Colombian Multidimensional Poverty Index (CMPI). To do that, we estimate the valuations of the individuals using a life satisfaction equation. We find that there is remarkably little overlap between the alternative measures when used to identify the worst-off. The different well-being measures identify different individuals as worst-off. The equivalent income measure identifies individuals with a lower income, who are in worse health, live in a house of lower value and have a larger chance of being unemployed. This finding highlights the empirical relevance of the selection of the well-being measure when implementing the capability approach.

Social choice theory really took off with Arrow’s seminal impossibility theorem (Arrow, 1951, 1963). This statement in no way wishes to belittle the great achievements and insights gained by de Borda, Condorcet, and others several centuries ago. Arrow formulated the problem of social choice in a very abstract setting. Consider a set of social states which has to be ranked by the social planner. Suppose the only information available to construct this social ranking consists of the ordinal preferences of the individuals over the social states. How can these individual rankings be mapped into a social ranking? Arrow showed that there does not exist an aggregation procedure satisfying a set of reasonably looking axioms on a universal domain of individual preferences.

This impossibility theorem spawned a large literature, in both voting theory and in welfare economics. One influential strand of this literature built further on the insight that Arrow’s setup restricted the available information for the planner to ordinal and interpersonally non-comparable individual utilities. It is not surprising that one cannot easily rank different distributions if interpersonal comparability is banned. The so-called ‘informational’ approach to social choice (d’Aspremont and Gevers, 1977; Roberts, 1980; Sen, 1970) showed that introducing various forms of interpersonal comparability of utility made it possible to escape from Arrow’s impossibility deadlock and to formulate so-called ‘welfarist’ social objective functions. The use of the term ‘welfarist’ has recently become ambiguous, because it has received many different connotations (Fleurbaey, 2003), but its original meaning was clear: an approach is called ‘welfarist’ if only the individual subjective utilities matter for the evaluation of social states. Welfarism does allow for different attitudes towards distribution. In the specific case of utilitarianism, which defines the social objective as the simple sum of the utilities of all individuals in society, the inequality aversion is equal to zero. The economic reinterpretation of Rawls’ (1971) difference principle, in which the social objective is to maximize the welfare level of the worst-off in society, is also welfarist with an inequality aversion equal to infinity. In addition, applied work in public economics has popularized intermediate forms of concave social welfare functions with an inequality aversion between zero and infinity (see, e.g., Atkinson, 1970).