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Reconciling the Rawlsian and the utilitarian approaches to the maximization of social welfare

  • Stark, Oded
  • Jakubek, Marcin
  • Falniowski, Fryderyk

Under a deadweight loss of tax and transfer, there is tension between the optimal policy choices of a Rawlsian social planner and a utilitarian social planner. However, when with a weight greater than a certain critical value the individuals’ utility functions incorporate distaste for low relative income, a utilitarian will select exactly the same income distribution as a Rawlsian.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 122 (2014)
Issue (Month): 3 ()
Pages: 439-444

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Handle: RePEc:eee:ecolet:v:122:y:2014:i:3:p:439-444
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  1. Oded Stark & Walter Hyll & Yong Wang, 2010. "Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy," Vienna Economics Papers 1009, University of Vienna, Department of Economics.
  2. Rawls, John, 1974. "Some Reasons for the Maximin Criterion," American Economic Review, American Economic Association, vol. 64(2), pages 141-46, May.
  3. Yaari, Menahem E., 1981. "Rawls, edgeworth, shapley, nash: Theories of distributive justice re-examined," Journal of Economic Theory, Elsevier, vol. 24(1), pages 1-39, February.
  4. Stark, Oded & Hyll, Walter, 2011. "On the economic architecture of the workplace: Repercussions of social comparisons among heterogeneous workers," MPRA Paper 28910, University Library of Munich, Germany.
  5. Stark, Oded & Fan, C. Simon, 2009. "A Theory of Migration as a Response to Occupational Stigma," Discussion Papers 55363, University of Bonn, Center for Development Research (ZEF).
  6. Blanchflower, David G. & Oswald, Andrew J., 2008. "Hypertension and happiness across nations," Journal of Health Economics, Elsevier, vol. 27(2), pages 218-233, March.
  7. Stark, Oded, 2013. "Stressful integration," University of Tuebingen Working Papers in Economics and Finance 56, University of Tuebingen, Faculty of Economics and Social Sciences.
  8. 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.
  9. Antonio Cabrales & Olivier Gossner & Roberto Serrano, 2013. "Entropy and the Value of Information for Investors," PSE - Labex "OSE-Ouvrir la Science Economique" hal-00812682, HAL.
  10. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  11. repec:oup:qjecon:v:92:y:1978:i:4:p:589-601 is not listed on IDEAS
  12. repec:adr:anecst:y:2001:i:63-64:p:03 is not listed on IDEAS
  13. Stark, Oded & Sorger, Gerhard, 2012. "Income redistribution going awry: The reversal power of the concern for relative deprivation," University of Tuebingen Working Papers in Economics and Finance 47, University of Tuebingen, Faculty of Economics and Social Sciences.
  14. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
  15. Stark, Oded & Taylor, J Edward, 1991. "Migration Incentives, Migration Types: The Role of Relative Deprivation," Economic Journal, Royal Economic Society, vol. 101(408), pages 1163-78, September.
  16. repec:oup:qjecon:v:120:y:2005:i:3:p:963-1002 is not listed on IDEAS
  17. David Card & Alexandre Mas & Enrico Moretti & Emmanuel Saez, 2010. "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction," NBER Working Papers 16396, National Bureau of Economic Research, Inc.
  18. Stark, Oded & Fan, C. Simon, 2010. "Migration for degrading work as an escape from humiliation," MPRA Paper 28905, University Library of Munich, Germany.
  19. Ireland, N. J., 2001. "Optimal income tax in the presence of status effects," Journal of Public Economics, Elsevier, vol. 81(2), pages 193-212, August.
  20. Hammond, Peter J., 1977. "Dual interpersonal comparisons of utility and the welfare economics of income distribution," Journal of Public Economics, Elsevier, vol. 7(1), pages 51-71, February.
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