文档介绍：CHAPTER 12
INCOME REDISTRIBUTION: CONCEPTUAL ISSUES
The Distribution of Income Among Households
Percentage Share
Hispanic origin
Source: US Bureau of the Census, “Historical Poverty Tables.”
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Figures are for 2004.
Poverty Rate (1960-2004)
Source: US Bureau of the Census, “Historical Poverty Tables.”
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Measuring Poverty
Poverty line
Interpreting the Distributional Data
Census income consists only of family’s cash receipts
in-kind transfers
Official figures ignore taxes
Income measured annually
Consumption data may provide better assessment of well-being
Problems defining unit of observation
Simple Utilitarianism
Utilitarian Social Welfare Function: W = F(U1, U2, ,,,, Un)
“Promote Greatest Good for Greatest Number”
Additive Social Welfare Function W = U1 + U2 + … + Un
Assume
Individuals have identical utility functions that depend only on their incomes
Utility functions exhibit diminishing marginal utility of income
Total amount of income is fixed
Implications for Income Inequality
Paul’s marginal utility
Peter’s marginal utility
Paul’s income
Peter’s income
0
0’
MUPaul
MUPeter
a
e
c
d
f
I*
b
Paul’s income
Peter’s income
Take ab from Peter and give to Paul
Paul gains this much utility
Peter loses this much utility
This is the net gain to society
Social welfare maximized
Evaluating the Assumptions
Assumption 1
Assumption 2
Assumption 3
The Maximin Criterion
Social Welfare Function W = Minimum(U1, U2, …, Un)
Maximin criterion - No inequality acceptable unless it works to the advantage of the least well off
Original position – “behind the veil of ignorance”
Critique of Rawls
Pareto Efficient Income Redistribution
Will redistribution always make someone worse off?
Utility Function Ui = F(X1, X2, …, Xn, U1, U2, …, Ui-1, Ui+1, …, Um)
Redistribution if