IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v1y1973i3p266-299.html
   My bibliography  Save this article

Distributional Externalities and the Optimal Form of Income Transfers

Author

Listed:
  • James D. Rodgers

    (Department of Economics Pennsylvania State University)

Abstract

When preferences exhibit certain interdependencies, redistributive transfers can make everyone better off. However, the optimal form of such transfers depends on the nature of the postulated externalities. Lump sum transfers cannot achieve some Pareto optima if interdependence involves particular commodities. Here, price subsidies or earmarked (voucher) transfer schemes are required. However, if the interdependence relates to the general welfare of recipients, cash transfers are preferable. Preferences revealed in the political process in favor of in-kind programs suggest "particular-commodity" interdependence. But even if this is so, the analysis does not provide a conclusive case for in-kind transfers. Among other things, comparative costs of administering and policing in-kind as opposed to cash programs must also be considered.

Suggested Citation

  • James D. Rodgers, 1973. "Distributional Externalities and the Optimal Form of Income Transfers," Public Finance Review, , vol. 1(3), pages 266-299, July.
    • Handle: RePEc:sae:pubfin:v:1:y:1973:i:3:p:266-299
    DOI: 10.1177/109114217300100302
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109114217300100302
    Download Restriction: no
    File URL: https://libkey.io/10.1177/109114217300100302?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. W. J. Corlett & D. C. Hague, 1953. "Complementarity and the Excess Burden of Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 21-30.
    2. Daly, George & Giertz, Fred J, 1972. "Welfare Economics and Welfare Reform," American Economic Review, American Economic Association, vol. 62(1), pages 131-138, March.
    3. von Furstenberg, George M & Mueller, Dennis C, 1971. "The Pareto Optimal Approach to Income Redistribution: A Fiscal Application," American Economic Review, American Economic Association, vol. 61(4), pages 628-637, September.
    4. Samuel Herman, 1940. "The Food Stamp Plan: A Study in Law and Economics," The Journal of Business, University of Chicago Press, vol. 13, pages 331-331.
    5. Olsen, Edgar O, 1971. "Some Theorems in the Theory of Efficient Transfers," Journal of Political Economy, University of Chicago Press, vol. 79(1), pages 166-176, Jan.-Feb..
    6. Lester C. Thurow, 1971. "The Income Distribution as a Pure Public Good," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(2), pages 327-336.
    7. Zeckhauser, Richard J, 1971. "Optimal Mechanisms for Income Transfer," American Economic Review, American Economic Association, vol. 61(3), pages 324-334, June.
    8. Mark V. Pauly, 1970. "Efficiency In The Provision Of Consumption Subsidies," Kyklos, Wiley Blackwell, vol. 23(1), pages 33-57, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harold M. Hochman & James D. Rodgers, 1977. "The Simple Politics of Distributional Preference," NBER Chapters, in: The Distribution of Economic Well-Being, pages 71-114, National Bureau of Economic Research, Inc.
    2. Casey Mulligan & Tomas Philipson, "undated". "Merit Motives and Government Intervention: Public Finance in Reverse," University of Chicago - Population Research Center 2000-03, Chicago - Population Research Center.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John F. Johnston, 1975. "Utility Interdependence and Redistribution: Methodological Implications for Welfare Economics and the Theory of the Public Household," Public Finance Review, , vol. 3(3), pages 195-228, July.
    2. J. Giertz, 1982. "A limited defense of Pareto optimal redistribution," Public Choice, Springer, vol. 39(2), pages 277-282, January.
    3. Bruce D. Fitzgerald, 1975. "Self-Interest or Altruism," Journal of Conflict Resolution, Peace Science Society (International), vol. 19(3), pages 462-479, September.
    4. Jérôme Ballet & Philippe Meral & Dawidson Razafimahatolotra, 2009. "Altruism, Paternalism and Transfers," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(3), pages 267-282.
    5. Walter S. Misiolek & Harold W. Elder, 1987. "Cost-Effective Redistribution: Implications of a Basic Needs Approach to Public Assistance," Public Finance Review, , vol. 15(1), pages 76-97, January.
    6. Christian Morrisson & Philippe Cazenave, 1973. "Fonctions d'utilité interdépendantes et théorie de la redistribution en économie de production," Revue Économique, Programme National Persée, vol. 24(5), pages 725-760.
    7. A. Lans Bovenberg & Frederick van der Ploeg, 2002. "Environmental Policy, Public Finance and the Labour Market in a Second-Best World," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 6, pages 112-153, Edward Elgar Publishing.
    8. Thomas D. Birch, 1987. "Basic Needs: Paternalistic Government Welfare Policy with Distortionary Taxation," Public Finance Review, , vol. 15(3), pages 298-321, July.
    9. Bruce Yandle Jr., 1974. "Welfare Programs and Donor-Recipient Adjustments," Public Finance Review, , vol. 2(3), pages 322-329, July.
    10. Siu, Jade & Sterck, Olivier & Rodgers, Cory, 2023. "The freedom to choose: Theory and quasi-experimental evidence on cash transfer restrictions," Journal of Development Economics, Elsevier, vol. 161(C).
    11. Geoffrey Brennan, 1973. "Pareto desirable redistribution: The non-altruistic dimension," Public Choice, Springer, vol. 14(1), pages 43-67, March.
    12. Charles Knoeber, 1977. "The demand for government transfers: A look at the recipients," Public Choice, Springer, vol. 32(1), pages 39-50, December.
    13. E. Pasour, 1981. "Pareto optimality as a guide to income redistribution," Public Choice, Springer, vol. 36(1), pages 75-87, January.
    14. Harold M. Hochman & James D. Rodgers, 1973. "Brennan and Walsh Reconsidered (Mutt and Jeff Ride Again)," Public Finance Review, , vol. 1(4), pages 359-371, October.
    15. Thomas A. Husted, 1990. "Micro-Based Examination of the Demand for Income-Redistribution Benefits," Public Finance Review, , vol. 18(2), pages 157-181, April.
    16. Saving, Jason L., 1999. "Migration, labor-leisure choice, and Pareto suboptimal redistribution," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 559-573, September.
    17. Hellwig, Christian & Werquin, Nicolas, 2022. "A Fair Day's Pay for a Fair Day's Work: Optimal Tax Design as Redistributional Arbitrage," TSE Working Papers 22-1284, Toulouse School of Economics (TSE), revised Jan 2023.
    18. Jing Xing, 2011. "Does tax structure affect economic growth? Empirical evidence from OECD countries," Working Papers 1120, Oxford University Centre for Business Taxation.
    19. Corneo, Giacomo & Fong, Christina M., 2008. "What's the monetary value of distributive justice," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 289-308, February.
    20. Vidar Christiansen & Stephen Smith, 2009. "Externality-correcting Taxes and Regulation," CESifo Working Paper Series 2793, CESifo.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:1:y:1973:i:3:p:266-299. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.