A transfer from a richer individual to poorer A transfer from a richer individual to poorer seems to be the most seems to be the most intuitive and straightforward way of reducing income inequality in a society. However, can such a transfer reduce the welfare of the society? We show that a rich...

The Gini coefficient features prominently in Amartya Sen's 1973 and 1997 seminal work on income inequality and social welfare. We construct the Gini coefficient from social-psychological building blocks, reformulating it as a ratio between a measure of social stress and aggregate income. We...