A limited defense of Pareto optimal redistribution
Pasour's paper is correct in pointing out that the utility interdependency approach fails to completely explain the pattern of redistribution which exists in society and to set definitive normative standards for what redistribution should be. This clearly does not justify, however, his conclusion that the approach is ‘an empty economic box.’ A half full box is not empty. As suggested here, this approach is particularly valuable in understanding the existence and the form of many transfer schemes which cannot be fully explained by other factors. As a normative guide, this approach suffers from the deficiencies which always arise when there is an attempt to use Pareto optimality as a guide for public policy, i.e., it seldom yields a single definitive outcome which can be designated as the most desirable. With all of its limitations, the use of Pareto optimality as a (limited) guide to redistribution questions is infinitely superior to the approach often used of envoking a social welfare function to deal with such questions. Distribution questions which cannot be resolved using the standard of Pareto optimality are ones for which there are no generally acceptable normative standards for making such decisions. Copyright Martinus Nijhoff Publishers 1982
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Volume (Year): 39 (1982)
Issue (Month): 2 (January)
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References listed on IDEAS
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- George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
- Orr, Larry L, 1976. "Income Transfers as a Public Good: An Application to AFDC," American Economic Review, American Economic Association, vol. 66(3), pages 359-371, June.
- Lester C. Thurow, 1971. "The Income Distribution as a Pure Public Good," The Quarterly Journal of Economics, Oxford University Press, vol. 85(2), pages 327-336.
- Daly, George & Giertz, Fred J, 1972. "Welfare Economics and Welfare Reform," American Economic Review, American Economic Association, vol. 62(1), pages 131-138, March.
- E. Pasour, 1981. "Pareto optimality as a guide to income redistribution," Public Choice, Springer, vol. 36(1), pages 75-87, January.
- J. Fred Giertz & Dennis Sullivan, 1977. "Donor optimization and the food stamp program," Public Choice, Springer, vol. 29(1), pages 19-35, March.
- J. Giertz & Dennis Sullivan, 1978. "On the political economy of food stamps," Public Choice, Springer, vol. 33(3), pages 113-117, January.
- Zeckhauser, Richard J, 1971. "Optimal Mechanisms for Income Transfer," American Economic Review, American Economic Association, vol. 61(3), pages 324-334, June.
- Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-557, Part I Se.
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