Measuring Inequality Attitudes by Defective Leaky Buckets A Comment

Amiel et al. (1999) use the Atkinson and the Gini social welfare functions to measure income inequality attitudes based on data from leaky-bucket experiments. Yet the experimental de-sign does not allow their subjects to perceive income inequality according to the Gini or the Atkinson inequality measures. Moreover, their experimental design tries to measure inequal-ity aversion by forcing their subjects to behave in accordance with inequality predilection. --Inequality aversion,leaky-bucket experiment.

Measuring Inequality Attitudes by Defective Leaky Buckets: A Comment

Amiel et al. (1999) use the Atkinson and the Gini social welfare functions to measure income inequality attitudes based on data from leaky-bucket experiments. Yet the experimental de-sign does not allow their subjects to perceive income inequality according to the Gini or the Atkinson inequality measures. Moreover, their experimental design tries to measure inequal-ity aversion by forcing their subjects to behave in accordance with inequality predilection

Relative Deprivation, Personal Income Satisfaction, and Average Well-Being under Different Income Distributions

This paper uses the data gained from an income categorization experiment for five shapes of income distributions to investigate background context effects, relative deprivation, range-frequency theory to explain back-ground context effects,individual income satisfaction versus aggregate well-being, and the dual patterns of income categorization and limen setting. It is shown that background context effects exist and are reected in relative deprivation. Not all precepts of range-frequency theory can be evidenced. Moreover, we demonstrate a welfare paradox which concerns a contradiction between individual income satisfaction and aggregate well-being. Finally, income categorization and limen setting harbor no response-mode effects, but exhibit conformity.Relative Deprivation; Income Distributions; Income Satisfaction; Context Effects

Lorenz, Pareto, Pigou: Who Scores Best? Experimental Evidence on Dominance Relations of Income Distributions

Using an experiment with material incentives, this paper investigates the violation of composite dominance relationships, viz. absolute Pareto dominance, Pareto rank dominance, transfer dominance, Lorenz dominance, and generalized Lorenz dominance. Moreover, we test tail independence. The experiment consists of two treatments, a self-concern mode (in which each subject expects payoffs according to her own choices), and a social-planner mode (in which subjects form their preferences without any chance of receiving payoffs when they became effective). The main focus of this paper centers on the behavioral shifts between the self-concern and the social-planner modes. We show, first, that subjects' behavior is different under the two treatments. Second, we show that there are less violations of the two Pareto dominance relations and of generalized Lorenz dominance and more violations of Lorenz dominance and of transfer dominance under the self-concern mode than under the social-planner mode. Within these groups, behavior is more similar under the self-concern mode than under the social-planner mode. Tail independence is widely rejected. --Income distributions,dominance relations,tail independence

Inequality measurement and the leaky-bucket paradox

The transfer principle requires inequality measures to decrease for mean preserving contractions. How much leakage of transfers can preserve inequality? Conditions are shown for leaky transfers to preserve inequality. We find that positive remainders with positive or negative leakage as well as negative remainders with positive leakage may occur. This constitutes the leaky-bucket paradox.

The Impossibility of a Just Pigouvian

An income inequality measure satisfies the Pigou-Dalton transfer principle if progressive transfers decrease income inequality. When transfers cause transaction costs, one can trace out the maximum leakage such that the transfer pays at the margin. An income inequality measure is leaky-bucket consistent if the transaction costs of a transfer are neither negative nor do they exceed the amount of the transfer. We show that the Pigou-Dalton transfer principle and leakybucket consistency are not reconcilable. Experimental research has shown that subjects? behavior exhibit graded compensating justice, that is compensating income changes which maintain the degree of income inequality and point in the same direction should provide less income compensation for richer than for poorer income recipients. We also show that the Pigou-Dalton transfer principle and graded compensating justice are not reconcilable. --

Flat Tax mit sozialer Grundsicherung : die optimale Kombination

Deutschland leidet unter einer zu hohen marginalen Abgabenbelastung. Investitionen und Arbeitsplätze wandern in Niedrigsteuerländer und in Länder mit niedrigen Arbeitskosten [das heißt, in Länder mit niedrigen Löhnen und/oder niedrigen lohnbezogenen Abgaben] ab. Im Inland selbst führt die Zusatzlast der Abgabenerhebung zu Wohlfahrtsverlusten und Abgabenaufkommensverlusten durch partielle Leistungsverweigerung. Isolierte Reformvorschläge des Steuersystems zur Senkung der Marginalbelastung – und damit der Durchschnittsbelastung – leiden unter Finanzierungsdefiziten, isolierte Reformvorschläge des sozialen Siche-rungssystems leiden unter Leistungseinschränkungen, welchen der soziale Ausgleich ermangelt. Eine flat tax mit sozialer Grundsicherung vermag hingegen eine optimale Kombination der Effizienz- und der Gerechtigkeitsseite der Abgabenerhebung zu realisieren. Das vorgestellte Reformkonzept ist gesamtwirtschaftlich finanzierbar, gestattet gleichzeitig eine radikale Unternehmenssteuerreform, schafft maximale Effizienz des Abgabensystems und ermöglicht dabei dennoch eine gleichmäßigere Einkommensverteilung mit eingebauter Förderung kinderreicher Familien. Dass es in Deutschland Politiker wie den Thüringer Ministerpräsidenten Dieter Althaus und in Großbritannien die Bow Group und die UK Independence Party gibt, die verwandte Reformkonzepte ansteuern, gibt Anlass zu Optimismus. --

Kommentar zu Bruno Deffains and Dominique Demougin - Das doppelte Holdup-Problem und der Wettbewerb der Rechtssysteme

Die Arbeit von Deffains und Demougin betrachtet ein Modell mit zwei Produktionsfaktoren, Arbeit und Kapital, einem Konsumgut, welches mit zwei Technologien, einer mit ausschließlichem Kapitaleinsatz und einer mit additiv-separablem Arbeits- und Kapitaleinsatz, produziert werden könne, und zwei Ländern mit jeweils einem Gesetzgeber, welcher die relative Verhandlungsmacht der Produktionsfaktoren bestimmen könne. Der Produktionsfaktor Kapital sei vollkommen mobil, der Produktionsfaktor Arbeit vollkommen immobil. In diesem Szenario bewirkt eine höhere Verhandlungsmacht des Faktors Arbeit, dass Kapital einmal von der Technologie 2 in Richtung Technologie 1 verdrängt wird, zum anderen aber auch, dass Kapital von Land mit höherer Verhandlungsmacht des Faktors Arbeit in das Land mit geringerer Verhandlungsmacht des Faktors Arbeit ausweicht. Die Autoren kommen zu dem Ergebnis, dass, wenn jeder der Gesetzgeber in den einzelnen Ländern isoliert handelt und eine soziale Wohlfahrtsfunktion maximiert, das erstbeste Optimum verfehlt wird, weil jeder Gesetzgeber in dem Bestreben, den Faktor Kapital im eigenen Land zu halten, die Verhandlungsmacht des Faktors Arbeit zu gering ausstatten wird. Eine Rechtsharmonisierung könnte so in beiden Ländern die soziale Wohlfahrt erhöhen. Methodisch läuft das Modell auf ein Gefangenendilemma hinaus, in welchem ein Nash-Gleichgewicht suboptimal ist und eine Pareto-optimale Lösung verfehlt wird. Das Modell ist extrem einfach gehalten, wird didaktisch gut präsentiert, seine Argumentation ist transparent und leicht zugänglich.

The Impossibility of a Just Pigouvian

An income inequality measure satisfies the Pigou-Dalton transfer principle if progressive transfers decrease income inequality. When transfers cause transaction costs, one can trace out the maximum leakage such that the transfer pays at the margin. An income inequality measure is leaky-bucket consistent if the transaction costs of a transfer are neither negative nor do the exceed the amount of the transfer. We show that the Pigou-Dalton transfer principle and leaky-bucket consistency are not reconcilable. Experimental research has shown that subjects’ behavior exhibit graded compensating justice, that is compensating income changes which maintain the degree of income inequality and point in the same direction should provide less income compensation for richer than for poorer income recipients. We show also that the Pigou-Dalton transfer principle and graded compensating justice are not reconcilable.Income distribution; Intermediate inequality indices; Unit-consistency

Lorenz meets rating but misses valuation

Using an experiment with material incentives, this paper investigates the violation of Lorenz relations in the case of dominant and single?crossing Lorenz curves. Our experimental design consists of two treatments: an income distribution treatment and a lottery treatment. Both treatments were conducted in Italy and Spain. In each treatment, subjects were asked to judge ten multiple?outcome lotteries or ten n?dimensional income distributions in terms of both ratings and valuations. This 2 × 2 × 2 experimental design, allows us to investigate the response?mode (rating versus valuation) and framing (lotteries versus income distributions) effects in subjects? perceptions concerning the two types of Lorenz relations. We found the existence of a marked response?mode effect, as only the ratings of the lotteries and income distributions confirm both Lorenz relations, whereas the valuations violate them. The framing effect is significant only for the Spanish data. For this data the sign of the framing effect depends on the type of the Lorenz relation considered. For crossing Lorenz curves, a higher conformity corresponds to the lottery frame, for Lorenz dominance a higher conformity corresponds to the income distribution frame. --Income Distributions,Lotteries,Lorenz Curves,Inequality and Risk Aversion,Response?Mode Effects