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Relative Satisfaction and Welfare Maximizing Wealth Distribution
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Alex Coram
Published/Copyright:
November 23, 2009
Suppose individuals get utilities from the total amount of wealth they hold and from their wealth relative to those above and below them in a near neighbourhood. This paper studies the distribution of wealth that maximizes an additive welfare function made up of these utilities. It shows that the optimal distribution mostly requires an egalitarian solution if the concern is with those above. If the concern is with those below it has some unexpected properties.
Published Online: 2009-11-23
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Keywords for this article
wealth distribution;
positional goods;
status;
inequality;
relative advantage
