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Ignorance, lotteries, and measures of economic inequality

Abstract

Towards further enhancing the conceptual unification of the literature on risk and inequality, we demonstrate that a number of existing inequality indices arise naturally from a Harsanyi-inspired model of choice under risk, whereby individuals act as expected (reference-dependent) utility maximizers in the face of an income quantile lottery. Among other things, our reformulation gives rise to a novel reinterpretation of these classical indices as measures of the desirability of redistribution in society.

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Correspondence to Christopher J. Bennett.

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Bennett, C.J., Zitikis, R. Ignorance, lotteries, and measures of economic inequality. J Econ Inequal 13, 309–316 (2015). https://doi.org/10.1007/s10888-015-9302-6

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Keywords

  • Redistribution
  • Inequality
  • Lotteries
  • Veil of ignorance
  • Tilted lotteries
  • Lorenz curve
  • Atkinson index
  • Donaldson-Weymark index
  • Gini index