This paper shows the power of applying Shannon’s (1948) information theory perspective to inequality measurement by considering the thought experiment of drawing a dollar at random from an income distribution and asking who the dollar came from. The surprise at being told who the dollar came...

This paper presents an analysis of the consequences for redistribution policies of achieving a more equal predistribution, that is, a more equal distribution of the predetermined income earning capabilities that individuals bring to the market. We show that optimal fiscal policies are less...