Title: A consistent multidimensional Pigou-Dalton transfer principle
Authors: Bosmans, Kristof
Lauwers, Luc
Ooghe, Erwin
Issue Date: 2006
Publisher: K.U.Leuven, Faculty of Economics and Applied Economics : Department of Economics
Series Title: CES - Discussion Paper Series (DPS) 06.20 pages:1-19
Abstract: The Pigou-Dalton principle demands that a regressive transfer decreases social welfare. In the unidimensional setting this principle is consistent, because regressivity in terms of attribute amounts and regressivity in terms of individual well-being coincide in the case of a single attribute. In the multidimensional setting, however, the relationship between the various attributes and well-being is complex. To formulate a multidimensional Pigou-Dalton transfer principle, a concept of wellbeing must therefore first be defined. We propose a version of the Pigou-Dalton principle that defines regressivity in terms of the individual well-being ranking that underlies the social ranking on which the principle is imposed. This well-being ranking (of attribute bundles) is induced from the social ranking over distributions in which all individuals have the same attribute bundle. It is shown that this new principle—the consistent Pigou-Dalton principle—imposes a quasi-linear structure on the well-being ranking. We discuss the implications of this result within the literature on multidimensional inequality measurement and within the literature on

Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center of Public Economics, Leuven
Research Center of Econometrics, Leuven
Department of Economics, Leuven - miscellaneous

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