The Pareto axiom

Basic principles can have big implications for policy.

He’s surprisingly attractive? Source.

The Pareto Axiom

People dream of having a scientific principle named after them, but Vilfredo Pareto really hit the jackpot: the Pareto distribution, the Pareto principle and Pareto frontier are all common parlance. But perhaps the most powerful idea named after him is the Pareto axiom¹, used to characterize systems in social choice theory. There are several ways to formalize it, but the axiom takes the following shape:

If a certain action is favored by one person and not disfavored by any other person, then a system of social choice should choose that course of action.

Put more plainly, if somebody benefits from something and nobody else cares then you might as well do the thing. A corollary is that if someone wants to take an actiona and nobody disapproves then they should be free to do so. This jives with a lot of ideas regarding freedom and individual liberties.

It’s a pretty simple principle, few would disagree with it on it’s own terms. But applied broadly, it has pretty radical implications for public policy. It basically says to allow any action that someone wants to do, so long as it doesn’t affect anyone else. That would imply that society should condone any individual and private act, including:

• Privately consuming any food, supplement, or drug.

• Privately enjoying any sort of media like violent video games or The Very Hungry Caterpillar.

• Privately thinking or expressing any opinion

• Individually producing any form of media with arbitrary content, so long as it isn’t shared with anyone else.

• Modifying ones own body via tattoos, surgery, exercise, etc.²

• Producing any product such as drugs, weapons, or copyrighted art, so long as it isn’t shared with anyone else.

This is already an uncomfortable conclusion from such a simple rule. Some of these acts feel wrong even under the assumption that the individual is doing these things in perfect privacy, without harming anyone but themselves. In fact, some of these acts are illegal in many if not all countries.

That being said, I’m pretty okay with these things happening on the condition of privacy. If we grant the (strong) assumption that these acts don’t spill over onto other people, they don’t seem wrong in and of themselves.

Exchange

The Pareto axiom admits a seemingly benign extension:

If a certain action is favored by a subset of people and not disfavored by any other person, then society should choose that action.

If an option is preferred by two or more people, that’s even better than an action preferred by only one person right? This opens a Pandora’s box of allowed activities:

• Any trade between two people including all forms of exchange, dealing drugs, prostitution, gambling, etc.

• Association of any person with any other person. Formation of any group.

• Group production or consumption of arbitrary media or products, including the Broadway hit musical Cats.

• Extensions of other individual rights to groups.

Right off the bat, the extended Pareto axiom implies that many illegal activities should be allowed. These rights are broader than they appear, for instance, if people can freely associate with anyone this implies a limited form of open borders, where people can live and work in any country, no travel visas or citizenship required.

The connection between this rule and trade is no accident, remember that markets don’t work without individual rights and the extended Pareto axiom grants roughly half of the rights markets need to function³.

States that obeyed the extended Pareto axiom wouldn’t be that different from modern liberal democracies. Just legalize things like drug use and liberalize work visas a bit. That doesn’t sound so bad.

The axiom also implies that individuals should be barred from activities that curtail other people’s freedom. For example, you have no right to enter someone’s home and prevent them from reading 50 Shades of Grey.

This has implications for nonviolent protest. It’s fine to wave signs on the side of the road, but once you block traffic, you’re preventing people from exercising certain right. Any society that obeys the extended Pareto axiom would have to ban these activities.

A way out?

I glossed over the fact that no activity is truly private because every decision you make will have some influence on other people. If you decide to stay in and watch a movie it still affects the friends that otherwise would have spent time with you.

So one way to wiggle out of the Pareto axiom is to say that in practice, people will never be completely neutral regarding private choices. Somebody will always be slightly harmed by individual choices, so the Pareto axiom has no force.

That’s certainly true, but it’s hard to find solid ground once you’ve rejected the axiom. If every individual action affects everyone else, shouldn’t we all have a vote on what you read or who you talk to? Shouldn’t your every action be bent towards serving the greater good?

Instead, I think we can sidestep this objection by making rules about what kinds of harms are too small to count. That way we can treat certain activities as if they were truly private. Watching a movie at home is a small enough harm to your friends that you should be allowed to do it unilaterally. Buying the last banana at the grocery store harms the next person who wants a banana, but they can just get one from someone else. Frantically waving signs on the side of the street distracts drivers, but banning that kind of annoyance would give the government too much power.

I want to “round down” these sorts of harms and pretend like everyone really is indifferent about whether you stay home and watch a movie, or buy a banana, or wave a sign. I think there are principles that can tell us when a harm is too small to matter, but that’s a topic for another time.

Conclusion

I’m tentatively okay with a society structured around the extended Pareto axiom. It implies more freedoms than we have today, but it wouldn’t be that different from the United States in its current form. It’s a simple basis for classical liberalism that guarantees a host of individual and group freedoms, such protecting exchange, religion, expression, and personal liberty.

In fact, it’s hard to go without something like the Pareto axiom. Allowing the government to have a say in private activities seems dangerously close to authoritarianism. Even a perfectly democratic government with control over individual and group choices would be unbearable. Imagine deciding whether you can get a PS5 based on a community vote.

At best, a government that didn’t follow the Pareto axiom but still preserved personal liberty and human flourishing would involve a list of things you can and can’t do. Selling stuff is mostly legal, except for selling recreational drugs, but there are some recreational drugs that you can sell like alcohol, … etc. That’s basically the system we have today, but giving governments the ability to change the rules all the time can lead to all sorts of bad consequences.

Perhaps it would be better to restructure legislation around protecting individual rights, using things like the Pareto axiom as a guide for what should and shouldn’t be allowed. In the future, we’ll talk about h

1. To avoid confusion with the Pareto principle, I’m going to stick with calling it an axiom in this post. However, “axiom” implies a level or rigour that is missing from this post. I’m merely using it as a rule or principle that guides policy.

2. On it’s own, the Pareto axiom wouldn’t imply that suicide is allowed, since presumably your death could affect people.

3. The other half being things related to property rights such as protections from extortion, slavery, or theft.