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Laissez-faire versus Pareto

Author

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  • Kristof Bosmans
  • Z. Emel Ozt ̈urk

Abstract

Consider two principles for social evaluation. The first, ‘laissez-faire’, says that mean-preserving redistribution away from laissez-faire incomes should be regarded as a social wors- ening. This principle captures a key aspect of liberal political philosophy. The second, weak Pareto, states that an increase in each individual’s disposable income should be regarded as a social improvement. We show that the combination of the two principles implies that total disposable income ought be maxi- mized. Strikingly, the relationship between disposable incomes and laissez-faire incomes must therefore be ignored, leaving little room for liberal values.

Suggested Citation

  • Kristof Bosmans & Z. Emel Ozt ̈urk, 2015. "Laissez-faire versus Pareto," Working Papers 2015_21, Business School - Economics, University of Glasgow.
    • Handle: RePEc:gla:glaewp:2015_21
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    References listed on IDEAS

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    1. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591, Decembrie.
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    4. Louis Kaplow & Steven Shavell, 2004. "Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle: Reply," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 249-278, February.
    5. K. J. Arrow & A. K. Sen & K. Suzumura (ed.), 2011. "Handbook of Social Choice and Welfare," Handbook of Social Choice and Welfare, Elsevier, edition 1, volume 2, number 2.
    6. Marc Fleurbaey & Bertil Tungodden & Howard F. Chang, 2003. "Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle: A Comment," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1382-1386, December.
    7. Louis Kaplow & Steven Shavell, 2001. "Any Non-welfarist Method of Policy Assessment Violates the Pareto Principle," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 281-286, April.
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    Cited by:

    1. Kristof Bosmans & Z. Emel Öztürk, 2021. "Measurement of inequality of opportunity: A normative approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(2), pages 213-237, June.

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    More about this item

    Keywords

    Laissez-faire; Pareto; Libertarianism; Equal sacrifice taxation; Liberal reward;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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