Fair, Ray C.
November 1971
Quarterly Journal of Economics;Nov71, Vol. 85 Issue 4, p551
Academic Journal
This article provides information on the optimal distribution of income under a particular set of value judgments. Much more empirical work is needed on the question of how innate ability is distributed and how education and innate ability affect productivity before more precise answers can be given. More information is also needed on how much people vary in their tradeoff between income and leisure and how their work effort responds to the structure of taxes. It has been assumed that everyone should be weighted equally in the social welfare function, that all people should be given an equal opportunity to achieve their potential, and that all people should be given the freedom to maximize their individual utility functions. This set of value judgments seems to be consistent with many people's ethical views, but it cannot be defended in any absolute sense. Given that the particular set of value judgments is to be accepted, there are a number of possible biases in the model that should be considered for future work. One possible bias relates to the specification of the individual utility functions. There may also be a bias toward equality in the model because the model does not consider wealth and inheritance taxes.


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