In this paper, the method of deriving the parameter ε of inequality aversion from a parametric distribution of incomes is proposed. It is assumed that a social decision-maker appraises welfare in income distributions by means of the constant inequality aversion utility function and that incomes...

Research background: Applied welfare economics offers various social welfare functions (SWF) for appraising income distributions. Social planners commonly use two SWFs: SWFε implied by income inequality aversion (ε) and SWFv implied by rank inequality aversion (v). However, a voluntary choice...