This chapter reviews the literature about inequality and welfare with a particular focus on whether Europe has a special sensitivity to these matters or specific outcomes. It is argued that both statements are likely to be true, which raises the possibility of a causal link. Europe has relatively good results in terms of inequality and welfare in comparison with other continents and more specifically America, because these issues matter for European people. Still, research needs to be fostered in at least 5 areas that are detailed at the end of this review. Specific attention is devoted to the contribution of other social sciences and natural sciences (cognitive science) to the development of our knowledge for the field of inequality and welfare.

The approach of equality of opportunity is becoming ubiquitous in the social justice literature. Marc Fleurbaey [1994], [2008] and John Roemer [1993], [1998] have played a major role in transmitting ideas put forth by philosophers and in transforming these ideas in models of social justice that can be absorbed by economists. The ideas of compensation and responsibility are defined in a different way by these two authors and we show that hybrid concepts are meaningful. More specifically, we propose a new principle of natural reward, ?reward on average,? which is compatible with the principle of compensation ex post in a quite general setting. Furthermore, we show how to introduce the idea of a social determinism in private choices in Fleurbaey?s approach.

During the last third of the twentieth century, political philosophers actively debated about the content of distributive justice; the ruling ethical view of utilitarianism was challenged by various versions of equality of opportunities. Economists formulated several ways of modeling these ideas, focusing upon how individuals are placed with respect to opportunities for achieving various outcomes, and what compensation is due to individuals with truncated opportunities. After presenting a review of the main philosophical ideas (section 2), we turn to economic models (sections 3 and 4). We propose a reformulation of the definition of economic development, replacing the utilitarian measure of GDP per capita with a measure of the degree to which opportunities for income acquisition in a nation have been equalized. Finally, we discuss issues that the econometrician faces in measuring inequality of opportunity, briefly review the empirical literature (section 6), and conclude (section 7).

The purpose of this article is to offer a non-technical selective survey for a general audience about how economists have progressively handled the concept of equality of opportunity. The key idea is that equality of opportunity not only deals with ex-ante inequalities, something that the name already suggests, but also with ex-post inequalities which makes the analysis quite different from that of the capability approach. The article is structured in three parts. First, we review the main theoretical issues about inequality of opportunity. We then follow by looking at the measurement issues and by presenting some empirical results. We finally provide an overview about the challenges faced by policies aiming at enhancing equality of opportunity.