- Title Pages
- List of Figures
- List of Tables
- List of Contributors
- Introduction
- Chapter 1 Why Economics Needs Ethical Theory
- Chapter 2 The Sen System of Social Evaluation
- Chapter 3 The Good Life and the Good Economy<sup>*</sup>
- Chapter 4 The Adaptation Problem, Evolution and Normative Economics<sup>*</sup>
- Chapter 5 Rights and Interests
- Chapter 6 Elements of a Theory of the Right to Development<sup>*</sup>
- Chapter 7 Rational Choice on General Domains<sup>*</sup>
- Chapter 8 Some Remarks on the Ranking of Infinite Utility Streams<sup>*</sup>
- Chapter 9 Individual Choices in a Non‐Consequentialist Framework<sup>*</sup>
- Chapter 10 The Method of Majority Decision and Rationality Conditions<sup>*</sup>
- Chapter 11 Convexity and Separability in Representing Consensus
- Chapter 12 Rights, Individual Preferences and Collective Rationality
- Chapter 13 Irrelevant Alternatives
- Chapter 14 Limited Rights and Social Choice Rules<sup>*</sup>
- Chapter 15 Dominance Criteria for Critical‐Level Generalized Utilitarianism<sup>*</sup>
- Chapter 16 The Measurement of Capabilities<sup>*</sup>
- Chapter 17 On Ultrapoverty<sup>*</sup>
- Chapter 18 Multidimensional Poverty Orderings<sup>*</sup>
- Chapter 19 External Capabilities<sup>*</sup>
- Chapter 20 On the Welfarist Rationale for Relative Poverty Lines<sup>*</sup>
- Chapter 21 Justice as Fairness and the Capability Approach<sup>*</sup>
- Chapter 22 Ungrouping Income Distributions
- Chapter 23 A Practical Proposal for Simplifying the Measurement of Income Poverty<sup>*</sup>
- Chapter 24 Concepts and Measures of Agency<sup>*</sup>
- Chapter 25 Sen's Identities
- Chapter 26 Welfare Economics and Giving for Development<sup>*</sup>
- Chapter 27 Equity and Sharing the Cost of a Public Project<sup>*</sup>
- Chapter 28 Isolation, Assurance and Rules<sup>*</sup>
- Chapter 29 Simple Formulae for Optimal Income Taxation and the Measurement of Inequality<sup>*</sup>
- Index of Names
- Index of Subjects
Simple Formulae for Optimal Income Taxation and the Measurement of Inequality *
Simple Formulae for Optimal Income Taxation and the Measurement of Inequality *
- Chapter:
- (p.535) Chapter 29 Simple Formulae for Optimal Income Taxation and the Measurement of Inequality^{*}
- Source:
- Arguments for a Better World: Essays in Honor of Amartya Sen
- Author(s):
Joseph E. Stiglitz (Contributor Webpage)
- Publisher:
- Oxford University Press
This chapter focuses on the measurement of inequality, in particular measuring when one income distribution is more unequal than another for any inequality averse social welfare function. While the Atkinson-Dalton measure illustrates the total cost of inequality (or the percentage of national income which society would be willing to give up in order to eliminate inequality), this chapter develops a marginal measure of inequality (how much society is willing to sacrifice to reduce inequality a given amount). This new measure of the value of marginal reductions in equality also focuses on the consequences of wage inequality with an elastic labor supply. Finally, the chapter relates the optimal tax structure to the new measure of inequality and provides a simple formula for determining the optimal tax rate.
Keywords: inequality, optimal taxation, Atkinson-Dalton measure, averse social welfare function, optimal tax rate
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- Title Pages
- List of Figures
- List of Tables
- List of Contributors
- Introduction
- Chapter 1 Why Economics Needs Ethical Theory
- Chapter 2 The Sen System of Social Evaluation
- Chapter 3 The Good Life and the Good Economy<sup>*</sup>
- Chapter 4 The Adaptation Problem, Evolution and Normative Economics<sup>*</sup>
- Chapter 5 Rights and Interests
- Chapter 6 Elements of a Theory of the Right to Development<sup>*</sup>
- Chapter 7 Rational Choice on General Domains<sup>*</sup>
- Chapter 8 Some Remarks on the Ranking of Infinite Utility Streams<sup>*</sup>
- Chapter 9 Individual Choices in a Non‐Consequentialist Framework<sup>*</sup>
- Chapter 10 The Method of Majority Decision and Rationality Conditions<sup>*</sup>
- Chapter 11 Convexity and Separability in Representing Consensus
- Chapter 12 Rights, Individual Preferences and Collective Rationality
- Chapter 13 Irrelevant Alternatives
- Chapter 14 Limited Rights and Social Choice Rules<sup>*</sup>
- Chapter 15 Dominance Criteria for Critical‐Level Generalized Utilitarianism<sup>*</sup>
- Chapter 16 The Measurement of Capabilities<sup>*</sup>
- Chapter 17 On Ultrapoverty<sup>*</sup>
- Chapter 18 Multidimensional Poverty Orderings<sup>*</sup>
- Chapter 19 External Capabilities<sup>*</sup>
- Chapter 20 On the Welfarist Rationale for Relative Poverty Lines<sup>*</sup>
- Chapter 21 Justice as Fairness and the Capability Approach<sup>*</sup>
- Chapter 22 Ungrouping Income Distributions
- Chapter 23 A Practical Proposal for Simplifying the Measurement of Income Poverty<sup>*</sup>
- Chapter 24 Concepts and Measures of Agency<sup>*</sup>
- Chapter 25 Sen's Identities
- Chapter 26 Welfare Economics and Giving for Development<sup>*</sup>
- Chapter 27 Equity and Sharing the Cost of a Public Project<sup>*</sup>
- Chapter 28 Isolation, Assurance and Rules<sup>*</sup>
- Chapter 29 Simple Formulae for Optimal Income Taxation and the Measurement of Inequality<sup>*</sup>
- Index of Names
- Index of Subjects