A consistent multidimensional Pigou-Dalton transfer principle

K.G.M. Bosmans, L. Lauwers, E. Ooghe

Research output: Contribution to journalArticleAcademicpeer-review

6 Citations (Scopus)

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).
Original languageEnglish
Pages (from-to)1358-1371
Number of pages14
JournalJournal of Economic Theory
Volume144
Issue number3
DOIs
Publication statusPublished - 1 Jan 2009

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