uu.seUppsala University Publications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Optimal inequality behind the veil of ignorance
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Institute for Housing and Urban Research. Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies.
2017 (English)In: Theory and Decision, ISSN 0040-5833, E-ISSN 1573-7187, Vol. 83, no 3, p. 431-455Article in journal (Refereed) Published
Abstract [en]

In Rawls’ (A theory of justice. Harvard University Press, Cambridge, 1971) influential social contract approach to distributive justice, the fair income distribution is the one that an individual would choose behind a veil of ignorance. Harsanyi (J Polit Econ 61:434–435, 1953, J Polit Econ 63:309–332, 1955, Am Polit Sci Rev 69:594–606, 1975) treated this situation as a decision under risk and arrived at utilitarianism using expected utility theory. This paper investigates the implications of applying cumulative prospect theory instead, which better describes behavior under risk. I find that the specific type of inequality in bottom-heavy right-skewed income distributions, which includes the log-normal income distribution, could be perceived as desirable. This optimal inequality result contrasts the implications of other social welfare criteria.

Place, publisher, year, edition, pages
Springer, 2017. Vol. 83, no 3, p. 431-455
Keywords [en]
Veil of ignorance, Prospect theory, Social welfare function, Income inequality
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-334013DOI: 10.1007/s11238-017-9599-7ISI: 000412098600008OAI: oai:DiVA.org:uu-334013DiVA, id: diva2:1158503
Funder
Forte, Swedish Research Council for Health, Working Life and WelfareAvailable from: 2017-11-20 Created: 2017-11-20 Last updated: 2018-01-31Bibliographically approved

Open Access in DiVA

fulltext(434 kB)27 downloads
File information
File name FULLTEXT01.pdfFile size 434 kBChecksum SHA-512
f6b32b45920f601b3594802e7b99dc8c1c56a21015e10c86a3541799fd3127b0ab36d3803f0f911b448364655f7d356d2554adb7bf5c695283a45f9f4271c955
Type fulltextMimetype application/pdf

Other links

Publisher's full text

Authority records BETA

Liang, Che-Yuan

Search in DiVA

By author/editor
Liang, Che-Yuan
By organisation
Institute for Housing and Urban ResearchUppsala Center for Fiscal Studies
In the same journal
Theory and Decision
Economics

Search outside of DiVA

GoogleGoogle Scholar
Total: 27 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 67 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf