TY  - JOUR
AU  - Kaplow,Louis
TI  - Concavity of Utility, Concavity of Welfare, and Redistribution of Income
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10005
PY  - 2003
Y2  - September 2003
UR  - http://www.nber.org/papers/w10005
L1  - http://www.nber.org/papers/w10005.pdf
N1  - Author contact info:
Louis Kaplow
Harvard University
Hauser 322
Cambridge, MA  02138
Tel: 617/495-4101
Fax: 617/496-4880
E-Mail: meskridge@law.harvard.edu
AB  - 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.
ER  -