NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Concavity of Utility, Concavity of Welfare, and Redistribution of Income

Louis Kaplow

NBER Working Paper No. 10005
Issued in September 2003
NBER Program(s):   LE

The marginal social value of income redistribution is understood to depend on both the concavity of individuals' utility functions and the concavity of the social welfare function. In the pertinent literatures, notably on optimal income taxation and on normative inequality measurement, it seems to be accepted that the role of these two sources of concavity is symmetric with regard to the social concern about inequality in the distribution of income. Direct examination of the question, however, reveals that this is not the case. Concavity of utility has a simple, direct effect on the marginal social value of redistribution, as might be expected, whereas concavity of the social welfare function has a more subtle influence, one that in some cases may not be very significant. The implications of this difference are examined for some standard forms of utility and welfare functions, including particular versions that appear in the optimal income taxation literature.

download in pdf format
   (206 K)

email paper

This paper is available as PDF (206 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10005

Published: Louis Kaplow, 2010. "Concavity of utility, concavity of welfare, and redistribution of income," International Tax and Public Finance, Springer, vol. 17(1), pages 25-42, February.

Users who downloaded this paper also downloaded these:
Kaplow w9852 The Value of a Statistical Life and the Coefficient of Relative Risk Aversion
Kaplow w15818 On the Taxation of Private Transfers
Kaplow w10407 On the Undesirability of Commodity Taxation Even When Income Taxation is Not Optimal
Kaplow and Shavell w9622 Fairness Versus Welfare: Notes on the Pareto Principle, Preferences, and Distributive Justice
Kaplow and Shavell w7051 Any Non-Individualistic Social Welfare Function Violates the Pareto Principle
 
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