A consistent multidimensional Pigou-Dalton transfer principle
AbstractThe unidimensional Pigou-Dalton transfer principle demands that a regressive transfer in income--a transfer from worse-off (poor) to better-off (rich)--decreases social welfare. In a multidimensional setting the direct link between income (or any other attribute) and individual well-being is absent. We interpret the social welfare level of a distribution in which each individual has the same bundle as the individual well-being level. We define regressivity on the basis of this individual well-being ranking. In a setting with both transferable and non-transferable attributes, the imposition of the ensuing "consistent" Pigou-Dalton principle forces individual well-being to have a quasi-linear structure in the transferable attributes. Since we allow for transferable and non-transferable attributes, our result provides a normative underpinning for criteria in the distinct literatures of multidimensional inequality measurement (only transferable attributes) and of needs (one transferable and one non-transferable attribute).
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 144 (2009)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/622869
Pigou-Dalton principle Multidimensional inequality measurement Majorization Budget dominance Needs Equivalence scale;
Other versions of this item:
- Kristof Bismans & Luc Lauwers & Erwin Ooghe, 2006. "A consistent multidimensional Pigou-Dalton transfer principle," Center for Economic Studies - Discussion papers ces0620, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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