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Social tension order: A new approach to inequality reduction

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  • Philippe Bich

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris)

  • Alain Chateauneuf

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne, IPAG Business School, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris)

  • Caroline Ventura

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne)

Abstract

We introduce a new order on income distributions that we call "social tension" order, based on the concepts of absolute satisfaction and absolute deprivation, as introduced by Chakravarty (1997) (see also Chateauneuf and Moyes, 2006). Our order postulates that antagonist groups of individuals behave differently when comparing welfare: each "poor" individual compares herself with richer individuals, while each "rich" individual compares herself with poorer ones. We prove that reducing social tension corresponds to fair taxation and provide an explicit algorithm that allows for transitioning from a dominated distribution to a dominating one through a sequence of elementary transfers that respect our order. Additionally, we construct a new index from the "social tension" order, which may better capture the various sources of inequality compared to the Gini index. Lastly, we characterize those expected utility functions that respect our order.

Suggested Citation

  • Philippe Bich & Alain Chateauneuf & Caroline Ventura, 2023. "Social tension order: A new approach to inequality reduction," PSE-Ecole d'économie de Paris (Postprint) halshs-04353027, HAL.
    • Handle: RePEc:hal:pseptp:halshs-04353027
    DOI: 10.1016/j.jmateco.2023.102886
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04353027v1
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