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- Title
Pareto-Desirable Redistribution in Kind: An Impossibility Theorem.
- Authors
Brennan, Geoffrey; Walsh, Cliff
- Abstract
This article argues that there is no such thing as Pareto-desirable redistribution in kind. One of the implications of the Paretian perspective on distributional questions, with its focus on donor-taxpayer preferences, has been to raise questions about the form which interpersonal transfers should take. In particular, the traditional view that redistribution should be effected in a lump sum manner, so as to avoid distorting the choices of recipients, seems to have given way to the view that in many cases redistribution in kind may be required because donor-taxpayers may not be indifferent as to how recipients spend the transfers they receive. Considering the evidence presented from studies on pareto-desirable redistribution, an alternative reformulation was developed. This reformulation involves donor concern for both the level of recipient consumption of some particular good and for the well-being of the recipient more generally. Unfortunately, under such a reformulation any Pareto-desirable redistribution must be effected in cash. The possibility of Pareto-desirable redistribution of an in-kind variety is obliterated. It is emphasized that what this study seeks to make clear is that such price subsidies have in general nothing to do with Pareto-desirable redistribution, and in fact, that Pareto-desirable redistribution in kind is conceptually impossible.
- Subjects
INCOME distribution; INCOME redistribution; PARETO optimum; TAXATION; WAGES-in-kind
- Publication
American Economic Review, 1977, Vol 67, Issue 5, p987
- ISSN
0002-8282
- Publication type
Article