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On how to divide a budget according to population and wealth

Author

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  • Ricardo Martínez

    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

We study the problem of dividing a budget among countries based on their population and wealth. We focus on order preservation properties that ensure higher transfers to those countries with larger populations and, at the same time, introduce a redistribution policy so that nations with lower wealth per capita obtain higher transfers per capita. We also require the allocation method to satisfy other principles related to process stability, including scale invariance, agenda independence, budget update, and grouping. The findings show that the unique alternative to fulfilling these principles is to allocate the budget in proportion to the population.

Suggested Citation

  • Ricardo Martínez, 2020. "On how to divide a budget according to population and wealth," ThE Papers 20/10, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:20/10
    as

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    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers20_10.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Allocation problem; budget; population; wealth; fairness; order preservation.;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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