Size and distribution of incomes as determinants of social welfare (Q1093503)

The paper is concerned with the relationship between the inequality of income distributions and the social welfare they imply. Starting-point is an ordering of income distributions in terms of inequality. Based on explicit value judgements about the tradeoff between size and distribution of incomes an ordering in terms of social welfare is derived. The welfare functions representing this ordering allow a size- distribution split up. It is shown that the procedure can be reversed. This ordinal approach is considerably more flexible and less arbitrary than most methods proposed in the literature.