A consistent multidimensional Pigou-Dalton transfer principle

Kristof Bosmans, Luc Lauwers and Erwin Ooghe

Journal of Economic Theory, 2009, vol. 144, issue 3, 1358-1371

Abstract: The unidimensional Pigou-Dalton transfer principle demands that a regressive transfer in income--a transfer from worse-off (poor) to better-off (rich)--decreases social welfare. In a multidimensional setting the direct link between income (or any other attribute) and individual well-being is absent. We interpret the social welfare level of a distribution in which each individual has the same bundle as the individual well-being level. We define regressivity on the basis of this individual well-being ranking. In a setting with both transferable and non-transferable attributes, the imposition of the ensuing "consistent" Pigou-Dalton principle forces individual well-being to have a quasi-linear structure in the transferable attributes. Since we allow for transferable and non-transferable attributes, our result provides a normative underpinning for criteria in the distinct literatures of multidimensional inequality measurement (only transferable attributes) and of needs (one transferable and one non-transferable attribute).

Keywords: Pigou-Dalton; principle; Multidimensional; inequality; measurement; Majorization; Budget; dominance; Needs; Equivalence; scale (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (16)

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Working Paper: A consistent multidimensional Pigou-Dalton transfer principle (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:144:y:2009:i:3:p:1358-1371

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