A Note on Generalized Transfers Principle with Reduced-Form Social Welfare Functions
AbstractIn most welfare analyses, especially in the literature on normative inequality measurement, it is a commonplace to assume a direct relationship between the distribution of income and social welfare. As a result, this relationship is formally summarized by a single function, called a reduced-form social welfare function. Hence, with reference to some transfer principles, normative considerations are introduced and the shape of the reduced-form is accordingly restricted. In this note, we investigate and question the relevance of this approach. After recognizing that any reduced-form social welfare function merges two elements of very different nature – individuals’ self-interested preferences over income (an empirical element) and those of the society over utilities (a normative element) – it is clear that it is problematic or at least misleading to make assumptions about the shape of the reduced-form social welfare function according to normative considerations only. However, we show that consistency can be restored whenever individuals’ preferences can be represented by completely monotone utility functions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke in its series Cahiers de recherche with number 11-06.
Length: 11 pages
Date of creation: Jul 2011
Date of revision: Jul 2011
Social Welfare; Inequality; Transfer Principles; Completely Monotone Utility Functions;
Find related papers by JEL classification:
- D3 - Microeconomics - - Distribution
- D6 - Microeconomics - - Welfare Economics
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-23 (All new papers)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Luc Savard).
If references are entirely missing, you can add them using this form.