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Egalitarian Equivalent Policy Analysis: Theory, Statistical Methods, and Evidence /
Protected Income and Inequality Aversion
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Description: Imagine that a large increment can be given to an individual in a society. We ask: what is the maximal sacrifice that can be imposed on another individual according to an evaluator for the sake of this increment? We show that the answer can reveal how inequality averse an evaluator is. In addition to relating levels of absolute or relative sacrifice to coefficients of inequality, we also characterize the classes of additively separable social welfare functions that guarantee specific absolute or relative levels of protection from that sacrifice.
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