Refer to Scenario 21-2. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of utilitarianism prefer? a. Only Plan A b. Only Plan B c. Neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy d. Either Plan A or Plan B
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Utilitarianism is a theory in normative ethics that suggests actions should be judged based on their consequences, specifically aiming to maximize overall happiness or utility for the greatest number of people. Show more…
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Redistributive philosophies and incentives Consider a society consisting of two people. Dmitri earns an income of $90,000 per year and Frances earns an income of $40,000 per year. The government is considering a redistribution plan that would impose a 15% tax on Dmitri's income and give the revenue to Frances. Without any incentive distortion, Dmitri would retain $76,500 and Frances would end up with $53,500. However, let us assume that since Dmitri will not receive all the income he earns, he decides to work less and earn an income of only $70,000, of which 15% x $70,000 = $10,500 will be owed in taxes. With the redistribution plan, Dmitri will take home an income of $. The $10,500 that Dmitri pays in taxes will be transferred by the government to Frances. Let us assume that since Frances now receives payment from the government, she will not work as many hours and will earn an income from work of only $37,000 instead of her initial $40,000. With the redistribution plan, Frances's total income (including the government payment received) is now $. Without a redistribution plan, total income in this society is $. After the redistribution plan is implemented, total income in this society is $. Therefore, the redistribution plan total income in this society. According to the maximin criterion, the government implement this redistribution plan. Why? The government is not entitled to take money away from one person and give it to another. Total societal utility will increase if the plan is enacted. The plan benefits Frances, who is the least well off member of society.
Rabia S.
Consider a society consisting of two people. Hubert earns an income of $120,000 per year and Kate earns an income of $25,000 per year. The government is considering a redistribution plan that would impose a 20% tax on Hubert's income and give the revenue to Kate. Without any incentive distortion, Hubert would retain $96,000 and Kate would end up with $49,000. However, let us assume that since Hubert will not receive all the income he earns, he decides to work less and earn an income of only $110,000, of which 20% x $110,000 = $22,000 will be owed in taxes. With the redistribution plan, Hubert will take home an income of $. The $22,000 that Hubert pays in taxes will be transferred by the government to Kate. Let us assume that since Kate now receives payment from the government, she will not work as many hours and will earn an income from work of only $24,000 instead of her initial $25,000. With the redistribution plan, Kate's total income (including the government payment received) is now $. Without a redistribution plan, total income in this society is $. After the redistribution plan is implemented, total income in this society is $. Therefore, the redistribution plan total income in this society. According to the utilitarian political philosophy, the $22,000 transferred from Hubert to Kate will benefit Kate than it hurts Hubert. Which of the following statements is true according to this philosophy? The redistribution may or may not be desirable, depending on the relative magnitude of the utility gain and the efficiency loss. The government should definitely institute the plan because it will increase overall utility. The government should not institute the plan because it has no right to take money from one person and give it to another.
Crystal W.
4. Redistributive philosophies and incentives Consider a society consisting of two people. Clancy earns an income of $90,000 per year and Eileen earns an income of $40,000 per year. The government is considering a redistribution plan that would impose a 15% tax on Clancy's income and give the revenue to Eileen. Without any incentive distortion, Clancy would retain $76,500 and Eileen would end up with $53,500. However, let us assume that since Clancy will not receive all the income he earns, he decides to work less and earn an income of only $70,000, of which 15% x $70,000 = $10,500 will be owed in taxes. With the redistribution plan, Clancy will take home an income of $. The $10,500 that Clancy pays in taxes will be transferred by the government to Eileen. Let us assume that since Eileen now receives payment from the government, she will not work as many hours and will earn an income from work of only $37,000 instead of her initial $40,000. With the redistribution plan, Eileen's total income (including the government payment received) is now $. Without a redistribution plan, total income in this society is $. After the redistribution plan is implemented, total income in this society is $. Therefore, the redistribution plan total income in this society. According to the maximin criterion, the government implement this redistribution plan. Why? Total societal utility will increase if the plan is enacted. The plan benefits Eileen, who is the least well off member of society. The government is not entitled to take money away from one person and give it to another.
Akash M.
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