Pareto Optimal Redistribution: The Case of Malice and Envy
Much attention has been directed in recent literature to the possibility of using familiar allocative welfare norms to handle policy questions relating to income distribution. l Most of the contributions in this area have been concerned, either implicitly or specifically, with models in which the rich derive benefits of an essentially altruistic kind from transfers to the poor. In such an environment, the possibility of Pareto desirable redistribution follows more or less automatically: universally beneficial transfers arise because all are universally beneficent. The environment is, however, constrained by the crucial prior assumption that the rich are philanthropically motivated.