Popular support for social evaluation functions

This paper provides sufficient conditions under which the preferences of a social decision maker accord with majority voting. We show that an additive and monotone utilitarian social evaluation function is consistent with the outcomes of majority voting for the class of income distributions that are symmetric under a strictly increasing transformation. An example is the lognormal distribution. The required symmetry condition is generally accepted employing panel data for 116 countries from the World Bank’s POVCAL database.In this manner, the proposed methodology provides the consistent degree of inequality aversion and shows that median income is a good proxy for welfare.

[1]  A. Sen,et al.  Real National Income , 1976 .

[2]  John E. Roemer,et al.  The Democratic Political Economy Of Progressive Income Taxation , 1999 .

[3]  M. C. Jones,et al.  A Brief Survey of Bandwidth Selection for Density Estimation , 1996 .

[4]  M. Yaari,et al.  A controversial proposal concerning inequality measurement , 1988 .

[5]  Jukka Pirttila,et al.  A ‘Leaky Bucket’ in the Real World: Estimating Inequality Aversion Using Survey Data , 2007 .

[6]  Fredrik Carlsson,et al.  Are People Inequality-Averse, or Just Risk-Averse? , 2001 .

[7]  A. Atkinson.  On the measurement of inequality , 1970 .

[8]  D. Black.  On the Rationale of Group Decision-making , 1948, Journal of Political Economy.

[9]  Allan H. Meltzer,et al.  A Rational Theory of the Size of Government , 1981, Journal of Political Economy.

[10]  M. Rothschild,et al.  The Changing Tolerance for Income Inequality in the Course of Economic DevelopmentWith A Mathematical Appendix , 1973 .

[11]  J. MacKinnon,et al.  Bootstrap tests: how many bootstraps? , 2000 .

[12]  D. Acemoglu,et al.  Coalition Formation in Non-Democracies , 2008 .

[13]  J. Creedy,et al.  Measuring Attitudes towards Inequality , 1999 .

[14]  H. P. Young,et al.  Progressive Taxation and Equal Sacrifice , 1990 .

[15]  B. Efron.  The jackknife, the bootstrap, and other resampling plans , 1987 .

[16]  Kevin Roberts,et al.  Voting over income tax schedules , 1977 .

[17]  J. Grandmont,et al.  Fiscally stable income distributions under majority voting, Lorenz curves and bargaining sets , 2006 .

[18]  Representative democracy and marginal rate progressive income taxation , 2003 .

[19]  Ignacio Ortuño-Ortin,et al.  Popular Support For Progressive Taxation , 1995 .

[20]  Anthony B. Atkinson,et al.  Wealth, Income, And Inequality , 1973 .

[21]  Peter J. Lambert,et al.  Inequality aversion and the natural rate of subjective inequality , 2003 .

[22]  Philippe De Donder,et al.  The Politics of Progressive Income Taxation with Incentive Effects , 2003 .

[23]  K. Arrow.  A Difficulty in the Concept of Social Welfare , 1950, Journal of Political Economy.

[24]  J. Pratt.  RISK AVERSION IN THE SMALL AND IN THE LARGE11This research was supported by the National Science Foundation (grant NSF-G24035). Reproduction in whole or in part is permitted for any purpose of the United States Government. , 1964 .

[25]  Fiscally Stable Income Distributions under Majority Voting and Bargaining Sets , 2004 .

[26]  A. Sen.  On Economic Inequality , 1974 .

[27]  Torsten Persson,et al.  Is Inequality Harmful for Growth? Theory and Evidence , 1991 .

[28]  H. Guitton,et al.  Public economics : an analysis of public production and consumption and their relations to the private sectors : proceedings of a conference held by the International Economic Association , 1971 .

[29]  I. Ahmad,et al.  Testing symmetry of an unknown density function by kernel method , 1997 .

[30]  John C. Harsanyi,et al.  Cardinal Utility in Welfare Economics and in the Theory of Risk-taking , 1953, Journal of Political Economy.

[31]  D. J. Finney,et al.  The Lognormal Distribution (With Special Reference to Its Use in Economics) , 1957 .

[32]  R. Strauss,et al.  Effective Federal Individual Tax Functions: An Exploratory Empirical Analysis , 1994 .

[33]  P. Lambert.  The Distribution and Redistribution of Income , 1989 .

[34]  Shlomo Yitzhaki,et al.  On an Extension of the Gini Inequality Index , 1983 .

[35]  Walter Bossert,et al.  Utilitarianism and the Theory of Justice , 2002 .

[36]  T. Verdier,et al.  Inequality, redistribution and growth: A challenge to the conventional political economy approach , 1996 .

[37]  Jeffrey S. Racine,et al.  A Robust Entropy-Based Test of Asymmetry for Discrete and Continuous Processes , 2008 .

[38]  M. Ravallion,et al.  Who wants to redistribute?: The tunnel effect in 1990s Russia , 2000 .

[39]  John A. Weymark,et al.  A single-parameter generalization of the Gini indices of inequality , 1980 .

[40]  Norman Schofield,et al.  The Mean Voter Theorem: Necessary and Sufficient Conditions for Convergent Equilibrium , 2007 .

[41]  Thomas Romer,et al.  Individual welfare, majority voting, and the properties of a linear income tax , 1975 .

[42]  A. Lemmi,et al.  Advances on income inequality and concentration measures , 2008 .

[43]  Anil K. Bera,et al.  A Test for Symmetry with Leptokurtic Financial Data , 2005 .

[44]  K. Arrow,et al.  Aspects of the theory of risk-bearing , 1966 .

[45]  M. Gouveia,et al.  Voting over flat taxes in an endowment economy , 1996 .

[46]  C. d'Aspremont,et al.  Social welfare functionals and interpersonal comparability , 2002 .

[47]  S. Kolm.  The Optimal Production of Social Justice , 1969 .

[48]  Daniel L. Millimet,et al.  Income Inequality, Taxation, and Growth , 2010 .