NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Utilitarianism and Horizontal Equity: The Case for Random Taxation

Joseph E. Stiglitz

NBER Working Paper No. 694 (Also Reprint No. r0333)
Issued in June 1981
NBER Program(s):   PE

This paper establishes that, far from being able to derive the principle of horizontal equity from utilitarianism, the principle is actually in- consistent with utilitarianism in a variety of circumstances. We derive conditions under which (a) it is optimal to impose random tax schedules (ex post randomization) ; and (b) it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals (ex ante randomization). The implications for optimal tax theory are discussed. More generally, it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with Pareto optimality.

download in pdf format
   (685 K)

download in djvu format
   (499 K)

email paper

This paper is available as PDF (685 K) or DjVu (499 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0694

Published: Stiglitz, Joseph E. "Utilitarianism and Horizontal Equity: The Case for Random Taxation." Journal of Public Economics, Vol. 18, No. 1 (June 1982) pp. 1-33. citation courtesy of

Users who downloaded this paper also downloaded these:
Kaplow w1679 Horizontal Equity: Measures in Search of a Principle
Stiglitz w2189 Pareto Efficient and Optimal Taxation and the New New Welfare Economics
Kaplow w4961 A Fundamental Objection to Tax Equity Norms: A Call for Utilitarianism
King w0468 An Index of Inequality: With Applications to Horizontal Equity and Social Mobility
Auerbach and Hassett w7035 A New Measure of Horizontal Equity
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us