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

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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Year of publication:	2013
Authors:	Stark, Oded ; Jakubek, Marcin ; Falniowski, Fryderyk
Institutions:	Wirtschaftswissenschaftlichen Fakultät, Eberhard-Karls-Universität Tübingen
Subject:	Maximization of social welfare \| Rawlsian social welfare function \| Utilitarian social welfare function \| Deadweight loss \| Distaste for low relative income

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Extent:	application/pdf
Series:	University of Tuebingen Working Papers in Economics and Finance.
Type of publication:	Book / Working Paper
Notes:	Number 65
Classification:	D31 - Personal Income, Wealth and Their Distributions ; D60 - Welfare Economics. General ; H21 - Efficiency; Optimal Taxation ; I38 - Government Policy; Provision and Effects of Welfare Programs
Source:	RePEc - Research Papers in Economics

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