Reading up on employment sex discrimination today, I ran across a fascinating case. A group of women sued their employer because under the employer’s retirement plan, women who opted for the annuity option received a smaller monthly pension check than men who did the same. In an annuity contract, individuals generally pay an insurance company a lump sum of money in exchange for a guaranteed monthly stipend for the remainder of their lives. To determine how much the monthly payment will be, the insurance company relies upon information about how long individuals usually live. Because women live longer than men, insurers provide lower monthly stipends for women than men even when the two pay the same lump sum amount.
The question the court resolved was whether an employer committed sex discrimination by offering sex-sensitive annuity options (answer: yes). For me, I am interested in the way that this problem illuminates moral debates about equality. As any dedicated philosophical egalitarian knows, the foundational question to egalitarianism is: equality of what? What is it that makes two people equal? Is it having equal money and resources? Is it having equal amounts of Rawlsian primary goods? Is it equal utility and welfare? Equal burdens and benefits? Equal capabilities?
Generally, these different measurements of equality greatly overlap. More resources means more capabilities, welfare, utility, and benefits. They differ in edge cases, but usually one unit of equality correlates strongly with the others. In the annuity case, however, there is a very stark split. If you think that two people are equal if they have the same amount of money and resources, then sex-sensitive annuity payouts are not unequal. Women — in aggregate — make up for their lower monthly payment by living more months. The annuity affords them the same cash payout as men over the course of their entire retirement.
If you think that two people are equal if they have the same capabilities, then sex-sensitive annuity payouts are unequal. Capabilities include things like being secure, being housed, doing leisure activities, and so on. These capabilities are realized on a monthly basis: you pay for living expenses and other capability-enhancing costs every single month. If you are provided a lower monthly allowance, your ability to realize capabilities during retirement is diminished. Sure you may get an equal sum of resources in the long run, but, measured by capabilities, you do not get an equal retirement.
So the question of whether sex-sensitive annuity payments are unequal turns entirely on a really fundamental moral decision about the appropriate way to understand equality. We need a set of basic assumptions before we can even begin to have a meaningful discussion. And this is true of so many economic subjects that we often talk about without any regard for their normative underpinnings.
A quick “wonky” or “economic” analysis of this case would quickly conclude that the annuities are actuarially equivalent, remark that women make up the lower payments by living longer, and that would be the end of it. Such an analysis would assume money/resource equality as the measure of equality without ever providing an argument for it or even consciously realizing it. This is what happens when certain moral ideas become embedded in a culture’s ideology. They stop being moral ideas open for debate, and turn into objective “common sense” truths. Ultimately that spells trouble for anyone who finds themselves disagreeing with the dominant ideology. Achieving political aims becomes difficult to impossible, and even being properly understood involves a huge undertaking.