I agree that this is a problem and had previously raised the question in a post on the Forum, (though it is my lowest scoring post ever so evidently lots of people disagree with my argument!)
This issue became especially clear in early attempts by economists to put a value on the life of people across countries. Since people in poor countries took on greater risk for less money, their lives were valued at a fraction of those in rich countries.
Another example is tickets. Suppose that we are selling tickets to the final of Euro 2020 and that Warren Buffet buys all the tickets for the game because he likes to watch games in empty stadia. Economists often say that because willingness to pay tracks utility across persons and the tickets went to the highest bigger, this outcome enhances social welfare compared to a world in which the ticket prices were kept artificially low. But obviously the fact that Buffet is willing to pay so much for the tickets is more a reflection of his massive wealth and peculiar tastes and not the fact that his welfare would actually be enhanced more than everyone else.
Economists then try to solve this by having independent fairness or equity constraints. But the market outcome is bad on utilitarian grounds.
I agree that this is a problem and had previously raised the question in a post on the Forum, (though it is my lowest scoring post ever so evidently lots of people disagree with my argument!)
This issue became especially clear in early attempts by economists to put a value on the life of people across countries. Since people in poor countries took on greater risk for less money, their lives were valued at a fraction of those in rich countries.
Another example is tickets. Suppose that we are selling tickets to the final of Euro 2020 and that Warren Buffet buys all the tickets for the game because he likes to watch games in empty stadia. Economists often say that because willingness to pay tracks utility across persons and the tickets went to the highest bigger, this outcome enhances social welfare compared to a world in which the ticket prices were kept artificially low. But obviously the fact that Buffet is willing to pay so much for the tickets is more a reflection of his massive wealth and peculiar tastes and not the fact that his welfare would actually be enhanced more than everyone else.
Economists then try to solve this by having independent fairness or equity constraints. But the market outcome is bad on utilitarian grounds.