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A consistent multidimensional Pigou-Dalton transfer principle

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  • Bosmans, Kristof
  • Lauwers, Luc
  • Ooghe, Erwin

Abstract

The 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).

Suggested Citation

  • Bosmans, Kristof & Lauwers, Luc & Ooghe, Erwin, 2009. "A consistent multidimensional Pigou-Dalton transfer principle," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1358-1371, May.
    • Handle: RePEc:eee:jetheo:v:144:y:2009:i:3:p:1358-1371
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    Cited by:

    1. Croci Angelini, Elisabetta & Michelangeli, Alessandra, 2012. "Axiomatic measurement of multidimensional well-being inequality: Some distributional questions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 548-557.
    2. Marcello Basili & Paulo Casaca & Alain Chateauneuf & Maurizio Franzini, 2017. "Multidimensional Pigou–Dalton transfers and social evaluation functions," Theory and Decision, Springer, vol. 83(4), pages 573-590, December.
    3. Rolf Aaberge & Andrea Brandolini, 2014. "Multidimensional poverty and inequality," Discussion Papers 792, Statistics Norway, Research Department.
    4. Claudio Zoli & Peter Lambert, 2012. "Sequential procedures for poverty gap dominance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(2), pages 649-673, July.
    5. Martyna Kobus & Marek Kapera & Vito Peragine, 2020. "Measuring multidimensional inequality of opportunity," SERIES 02-2020, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Feb 2020.
    6. Piera Mazzoleni & Elisa Pagani & Federico Perali, 2019. "The curvature properties of social welfare functions," Working Papers 493, ECINEQ, Society for the Study of Economic Inequality.
    7. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2015. "What do normative indices of multidimensional inequality really measure?," Journal of Public Economics, Elsevier, vol. 130(C), pages 94-104.
    8. Piera Mazzoleni & Elisa Pagani & Federico Perali, 2023. "On the Curvature Properties of “Long” Social Welfare Functions," Mathematics, MDPI, vol. 11(7), pages 1-14, March.
    9. Laurence Kranich, 2009. "Measuring opportunity inequality with monetary transfers," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(4), pages 371-385, December.
    10. Erwin Ooghe & Erik Schokkaert & Hannes Serruys, 2023. "Fair Earnings Tax Reforms," CESifo Working Paper Series 10242, CESifo.

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    More about this item

    Keywords

    Pigou-Dalton principle Multidimensional inequality measurement Majorization Budget dominance Needs Equivalence scale;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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