September 2020

IZA DP No. 13662: An Economics-Based Rationale for the Rawlsian Social Welfare Program

published in: Rodríguez, J.G. and Bishop, J.A. (eds), Inequality, Redistribution and Mobility, Bingley, 2020, 179-186

We show that a social planner who seeks to allocate a given sum in order to reduce efficiently the social stress of a population, as measured by the aggregate relative deprivation of the population, pursues a disbursement procedure that is identical to the procedure adhered to by a Rawlsian social planner who seeks to allocate the same sum in order to maximize the Rawlsian maximin-based social welfare function. Thus, the constrained minimization of aggregate relative deprivation constitutes an economics-based rationale for the philosophy-based constrained maximization of the Rawlsian social welfare function.