Economics 2159A/B Lecture 12: Chapter6 Income Restriction
19 Dec 2015
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Document Summary
Economists usually confine their analyses of questions of equity to determinations of the impact of alternative polices on the distribution of well-being among citizens. At central stage in these analyses are people"s preference. Maximized utility x* is way more below what we required. Poverty in the midst of wealth is regarded as inequitable by many. Critics of the market system argue that these poor persons should receive transfers financed by taxes on more fortunate members of society. The conceptual tool for introducing equity into the analysis of resource allocation problems is the social welfare function which measures social welfare as a function of the utility levels achieved by the individuals of society. The appeal of utilitarianism arises out of the fact that, under certain conditions, it implies an equal distribution of income. Under other conditions, we may be distributed by the results of the utilitarian approach.
