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CHAPTER 12 INCOME REDISTRIBUTION: CONCEPTUAL ISSUES The Distribution of Income Among Households Who is Poor? Poverty Rate (1960-2004) Measuring Poverty Poverty line Interpreting the Distributional Data Census income consists only of family’s cash receipts in-kind transfers Official figures ignore taxes Income measured annually Consumption data may provide better assessment of well-being Problems defining unit of observation Simple Utilitarianism Utilitarian Social Welfare Function:W = F(U1, U2, ,,,, Un) “Promote Greatest Good for Greatest Number” Additive Social Welfare FunctionW = U1 + U
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