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

Oded Stark, Marcin Jakubek, Fryderyk Falniowski

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)439-444
Number of pages6
JournalEconomics Letters
Volume122
Issue number3
DOIs
StatePublished - Mar 2014
Externally publishedYes

Keywords

  • Deadweight loss
  • Distaste for low relative income
  • Maximization of social welfare
  • Rawlsian social welfare function
  • Utilitarian social welfare function

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