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