Relative Satisfaction and Welfare Maximizing Wealth Distribution

Coram Alex and Noakes Lyle
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Coram Alex: The University of Western Australia, abtcoram@cyllene.uwa.edu.au
Noakes Lyle: The University of Western Australia, lyle@maths.uwa.edu.au

The B.E. Journal of Theoretical Economics, 2009, vol. 9, issue 2, 16

Abstract: Suppose individuals get utilities from the total amount of wealth they hold and from their wealth relative to those above and below them in a near neighbourhood. This paper studies the distribution of wealth that maximizes an additive welfare function made up of these utilities. It shows that the optimal distribution mostly requires an egalitarian solution if the concern is with those above. If the concern is with those below it has some unexpected properties.

Keywords: wealth distribution; positional goods; status; inequality; relative advantage (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejtec:v:9:y:2009:i:2:n:1

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DOI: 10.2202/1935-1704.1513

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