Wednesday, December 05, 2007

The Limits of Egalitarianism

From Argentina:
It's not fair, he said. The beautiful people get all the breaks. Beauty is a natural advantage and he wants the good-lookers to be taxed to finance compensation for the ugly people.
A good topic for class discussion: What are the limits of government redistribution to achieve egalitarian goals?

A utilitarian might try to argue that while the utility of ugly people is lower on average, their marginal utility of income is no different, so there is no reason to redistribute based on beauty. If, however, beauty is correlated with income, which it is, then like height, it should be taxed, even according to the logic of utilitarianism. Moreover, a social planner with egalitarian preferences (that is, who has a social welfare function that is concave over individual utilities) would want to further tax the beautiful to compensate the ugly in order to equalize, at least somewhat, the levels of utility.

Most people would reject a beauty tax as absurd, which only goes to show that that most people do not share the moral sentiments often assumed in the economic literature on optimal tax policy.