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Redistribution and the Efficiency


  • Hans Georg Petersen


Redistribution and the Efficiency (by Hans Georg Petersen) - ABSTRACT: The trade-off between efficiency and justice is one of the most important political conflicts in democratic societies. However, a clear definition of justice is helpful to come to a social consensus on a quasi-optimal mix of both important societal targets. While justice of ability is fully in accordance with economic efficiency, the justice of needs concept requires a more careful analytical investigation. Justice of needs and combating poverty is always connected with income redistribution; in case of altruism the redistribution often takes place on a voluntary basis, which is obviously positive from a social perspective and even trouble-free for economic efficiency. In case of egoistic sentiments, voluntary redistribution becomes questionable and the state as redistributive agent begins to play an important role. Whereas altruism and egoism overwhelmingly will lead to a societal agreement on anti-poverty strategies, envy as a negative interdependency in between the individual utility functions plays a harmful and dangerous role for a social consensus in democratic societies.

Suggested Citation

  • Hans Georg Petersen, 2004. "Redistribution and the Efficiency," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2004(82).
  • Handle: RePEc:fan:steste:v:html10.3280/ste2004-082001

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