A consistent multidimensional Pigou-Dalton transfer principle
AbstractThe Pigou-Dalton principle demands that a regressive transfer decreases social welfare. In the unidimensional setting this principle is consistent, because regressivity in terms of attribute amounts and regressivity in terms of individual well-being coincide in the case of a single attribute. In the multidimensional setting, however, the relationship between the various attributes and well-being is complex. To formulate a multidimensional Pigou-Dalton transfer principle, a concept of wellbeing must therefore first be defined. We propose a version of the Pigou-Dalton principle that defines regressivity in terms of the individual well-being ranking that underlies the social ranking on which the principle is imposed. This well-being ranking (of attribute bundles) is induced from the social ranking over distributions in which all individuals have the same attribute bundle. It is shown that this new principle—the consistent Pigou-Dalton principle—imposes a quasi-linear structure on the well-being ranking. We discuss the implications of this result within the literature on multidimensional inequality measurement and within the literature on needs.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/103688.
Date of creation: 2006
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Pigou-Dalton principle; Multidimensional inequality measurement; Majorization; Budget dominance; Needs; Weak equity axiom;
Other versions of this item:
- 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.
- 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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Open Access publications from Katholieke Universiteit Leuven
urn:hdl:123456789/402564, Katholieke Universiteit Leuven.
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