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A concern about low relative income, and the alignment of utilitarianism with egalitarianism

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  • Stark, Oded
  • Kobus, Martyna
  • Jakubek, Marcin

Abstract

A utilitarian social planner who maximizes social welfare assigns the available income to those who are most efficient in converting income into utility. However, when individuals are concerned about their income falling behind the incomes of others, the optimal income distribution under utilitarianism is equality of incomes.

Suggested Citation

  • Stark, Oded & Kobus, Martyna & Jakubek, Marcin, 2012. "A concern about low relative income, and the alignment of utilitarianism with egalitarianism," Economics Letters, Elsevier, vol. 114(3), pages 235-238.
    • Handle: RePEc:eee:ecolet:v:114:y:2012:i:3:p:235-238
    DOI: 10.1016/j.econlet.2011.10.024
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    References listed on IDEAS

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    1. Stark, Oded & Fan, C. Simon, 2011. "Migration for degrading work as an escape from humiliation," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 241-247, March.
    2. Oded Stark & Walter Hyll & Yong Wang, 2012. "Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy," Economica, London School of Economics and Political Science, vol. 79(313), pages 62-75, January.
    3. Oded Stark & Walter Hyll, 2011. "On the Economic Architecture of the Workplace: Repercussions of Social Comparisons among Heterogeneous Workers," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 349-375.
    4. Blanchflower, David G. & Oswald, Andrew J., 2008. "Hypertension and happiness across nations," Journal of Health Economics, Elsevier, vol. 27(2), pages 218-233, March.
    5. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 963-1002.
    6. Stark, Oded & Taylor, J Edward, 1991. "Migration Incentives, Migration Types: The Role of Relative Deprivation," Economic Journal, Royal Economic Society, vol. 101(408), pages 1163-1178, September.
    7. repec:adr:anecst:y:2001:i:63-64:p:03 is not listed on IDEAS
    8. Daniel J. Zizzo & Andrew J. Oswald, 2001. "Are People Willing to Pay to Reduce Others'Incomes?," Annals of Economics and Statistics, GENES, issue 63-64, pages 39-65.
    9. C. Simon Fan & Oded Stark, 2011. "A Theory Of Migration As A Response To Occupational Stigma," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 549-571, May.
    10. Tinbergen, Jan, 1970. "A Positive and a Normative Theory of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 16(3), pages 221-234, September.
    11. Jan Tinbergen, 1970. "A Positive And A Normative Theory Of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 16(3), pages 221-234, March.
    12. Oded Stark, 2010. "Looking at the Integration of Nations through the Lens of the Merger of Populations: Preliminary Superadditivity and Impossibility Results," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 146(IV), pages 661-675, December.
    13. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    14. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931, Decembrie.
    15. repec:adr:anecst:y:2001:i:63-64:p:04 is not listed on IDEAS
    16. Fliessbach, Klaus & Weber, Bernd & Trautner, P. & Dohmen, Thomas J. & Sunde, Uwe & Elger, C. E. & Falk, Armin, 2007. "Social comparison affects reward-related brain activity in the human ventral striatum," Munich Reprints in Economics 20362, University of Munich, Department of Economics.
    17. Shlomo Yitzhaki, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(2), pages 321-324.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stark, Oded, 2013. "On the Economics of Others," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 5, pages 709-715.

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    More about this item

    Keywords

    Utilitarianism; Income equality; Social welfare maximization; Relative income;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • I0 - Health, Education, and Welfare - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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