A blind couple are outraged that they got charged extra at a hotel when their dogs allegedly moutled all over the place and required extra cleaning work to be done. There appears to be some dispute over exactly what happened, and the manager of the hotel is clearly a PR disaster area, but is it fair that the couple should have been charged extra if it cost the hotel more to accommodate them?
Well, ordinarily, it makes sense to charge more when the cost of providing a service increases; however, it seems unfair to penalise those who are already disadvantaged through no fault of their own. Yet requiring hotels to house them and imposing the cost on the hotel owners also seems unfair: why should the hotel owners pay the entire cost of accommodating a few individuals’ disabilities? Since most people would like to see services provided for disabled people, yet few people are willing to individually pay for them, the obvious solution is to spread the cost over everyone.
There are two obvious ways to do this: first, the government could make it an offence to refuse service on the basis of a disability or to charge a different rate to a disabled person for providing a service. This would force service providers to spread the cost of providing services to the disabled over all of their customers. Prices would rise very slightly and everyone who used the service would subsidise the disabled people who also used it. The drawbacks is that this method spreads the costs only over those who use the service, not the entire population who profess to care about the welfare of the disabled. It may also be difficult to police discrimination against the disabled. As a business, finding a method for reducing the number of disabled people using your service may allow you to cut your prices and gain an advantage over the competition. It may thus create a perverse incentive for businesses to find a way to circumvent the law.
Secondly, the government could directly subsidise the provision of services to disabled people. This has the benefit of spreading the costs of service provision over the entire tax paying population; however, it is likely to be a more cumbersome scheme with far higher administrative costs.
In either case the goal is to create a system which treats the disabled in an equitable fashion, without imposing unnecessarily harsh costs on any individual members of society. Unfortunately, mechanism design is not my forte, so does anyone with more talent and experience know of better schemes?