Distributional Neutral Welfare Ranking-Extending Pareto Principle

Marjit, Sugata and Sarkar, Sandip (2016): Distributional Neutral Welfare Ranking-Extending Pareto Principle.

Abstract

The well known Pareto criterion used in the context of efficiency and welfare has to do with absolute changes whereas in every domain of economic behavior inequality or relative changes has become a major concern. We propose an inequality-preserving or distribution neutral Pareto criterion-the strong Pareto superior or SPS allocation which preserves the initial distribution and makes everyone better off. Our main result is that whenever there is a gain in the aggregate value of the relevant attribute, there exists a unique counterfactual allocation which is SPS.

• Item Type: MPRA Paper
• Language: English
• Keywords: Strong Pareto Superiority, Inequality, Trade
• Subjects: D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; F - International Economics > F1 - Trade > F10 - General

References

Arrow, K. J. (1963). Social Choice and Individual Values. Number 12. Yale University Press.

Atkinson, A. B. and Stiglitz, J. E. (2015). Lectures on public economics. Princeton University Press.

De Scitovszky, T. (1941). A note on welfare propositions in economics. The Review of Economic Studies, 9(1):77-88.

Pickett, K. E. and Wilkinson, R. G. (2015). Income inequality and health: a causal review. Social Science & Medicine, 128:316-326.

Piketty, T. (2014). Capital in the twenty-first century. Harvard University Press.

Samuelson, P. A. (1958). Aspects of public expenditure theories. The Review of Economics and Statistics, pages 332-338.

Sen, A. (1970). Collective choice and social welfare.

Stewart, F. (2004). Development and security. Conflict, Security & Development, 4(3):261-288.

Stiglitz, J. (2012). The price of inequality. Penguin UK.

Stiglitz, J. E. (1987). Pareto efficient and optimal taxation and the new new welfare economics. Handbook of public economics, 2:991-1042. 7