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Fairness and the proportionality principle

Abstract

How should income be distributed in a way that respects both the egalitarian ideal that inequalities due to differences in opportunities should be eliminated and the liberal ideal that people should be free to pursue their own idea of the good life without interference from society? We show that reasonable interpretations of the egalitarian and the liberal ideal characterize what we refer to as the generalized proportionality principle. This principle states that an individual should have the share of total income that he or she would have had if everyone had the same opportunities and these opportunities were given by the average of the pre-tax income functions of all individuals in society. We argue that a redistribution mechanism based on this principle would eliminate unfair inequalities and preserve fair inequalities, and discuss when the generalized proportionality principle is equivalent to the simple proportionality principle.

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Notes

  1. 1.

    Our work is inspired by Iturbe-Ormaetxe (1997) and Sprumont (1997), who study related redistribution mechanisms.

  2. 2.

    See Fleurbaey and Maniquet (2011) for an excellent survey of alternative interpretations of liberal egalitarianism in the social choice literature.

  3. 3.

    We thus focus on cases where talent and effort are unidimensional, but it is straightforward to extend the main analysis to the multidimensional cases. Further, this formal framework also presupposes that we can clearly distinguish between talent and effort, which may not always be the case in practice where some factors affecting income (for example education) may be shaped by both talent and effort.

  4. 4.

    Our results do not depend on the set of possible effort and talent levels being the set of real numbers. All the results in the paper can be established as long as there is more than one element in \(\Omega ^{E},\Omega ^{T}\).

  5. 5.

    In this framework, all effort levels are available for all talent levels. One might argue that for some interpretations of effort, low talented people have a more restricted set of available effort levels than high talented people.

  6. 6.

    In an online appendix, we discuss the relationship between the conditions introduced in this section and alternative formulations of the egalitarian and the liberal ideal.

  7. 7.

    It follows straightforwardly that NEUDT implies NEUT.

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Correspondence to Bertil Tungodden.

Additional information

We have received extremely useful comments and suggestions from Marc Fleurbaey, Juan D. Moreno-Ternero, and two anonymous referees. The project was financed by support from the Research Council of Norway, research grant 236995 and administered by The Choice Lab.

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Cappelen, A.W., Tungodden, B. Fairness and the proportionality principle. Soc Choice Welf 49, 709–719 (2017). https://doi.org/10.1007/s00355-016-1016-6

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