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

Listed author(s):
  • 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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File URL: http://www.sciencedirect.com/science/article/pii/S0165176513005132
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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
DOI: 10.1016/j.econlet.2013.11.019
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. 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.
  2. 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.
  3. Stark, Oded & Fan, Simon C., 2010. "A Theory of Migration as a Response to Occupational Stigma," MPRA Paper 21688, University Library of Munich, Germany.
  4. Erzo F.P. Luttmer, 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," NBER Working Papers 10667, National Bureau of Economic Research, Inc.
  5. Blanchflower, David G. & Oswald, Andrew J., 2007. "Hypertension and Happiness across Nations," The Warwick Economics Research Paper Series (TWERPS) 828, University of Warwick, Department of Economics.
  6. 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.
  7. Stark, Oded & Hyll, Walter & Wang, Yong, 2011. "Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy," Discussion Papers 99415, University of Bonn, Center for Development Research (ZEF).
  8. 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.
  9. Michael J. Boskin & Eytan Sheshinski, 1978. "Optimal Redistributive Taxation When Individual Welfare Depends upon Relative Income," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 589-601.
  10. Serrano, Roberto & Gossner, Olivier & Cabrales, Antonio, 2011. "Entropy and the value of information for investors," UC3M Working papers. Economics we1104, Universidad Carlos III de Madrid. Departamento de Economía.
  11. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309-309.
  12. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-116, March.
  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. 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.
  15. 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.
  16. 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.
  17. Stark, Oded & Fan, C. Simon, 2010. "Migration for degrading work as an escape from humiliation," MPRA Paper 28905, University Library of Munich, Germany.
  18. Stark, Oded, 2013. "Stressful integration," University of Tuebingen Working Papers in Economics and Finance 56, University of Tuebingen, Faculty of Economics and Social Sciences.
  19. 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.
  20. repec:adr:anecst:y:2001:i:63-64:p:03 is not listed on IDEAS
  21. Rawls, John, 1974. "Some Reasons for the Maximin Criterion," American Economic Review, American Economic Association, vol. 64(2), pages 141-146, May.
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