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Reconciling the Rawlsian and the utilitarian approaches to the maximization of social welfare
Institution:1. University of Bonn, Germany;2. University of Klagenfurt, Austria;3. University of Vienna, Austria;4. University of Warsaw, Poland;5. Cracow University of Economics, Poland;1. Institute for Frontier Materials, Deakin University, Geelong, Victoria 3220, Australia;2. Formerly Victorian College of Agricultural and Horticulture, Glenormiston Agricultural College, Glenormiston, Victoria 3265, Australia;1. University of Michigan, Department of Economics, United States;2. University of Alabama, Department of Economics, Finance, and Legal Studies, United States;1. Dermatoepidemiology Unit, Providence Veterans Affairs Medical Center, Providence, Rhode Island;2. Department of Dermatology, Warren Alpert Medical School of Brown University, Providence, Rhode Island;3. Department of Epidemiology, Warren Alpert Medical School of Brown University, Providence, Rhode Island;4. Institute of Medical Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts;5. Department of Aeronautics and Astronautics and Engineering Systems, Massachusetts Institute of Technology, Cambridge, Massachusetts;6. University of Michigan Medical School, Ann Arbor, Michigan
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.
Keywords:Maximization of social welfare  Rawlsian social welfare function  Utilitarian social welfare function  Deadweight loss  Distaste for low relative income
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