Suppose there are two possible income distributions in a society of ten people. In the first distribution, nine people have incomes of $30,000 and one person has an income of $10,000. In the second distribution, all ten people have incomes of $25,000.
a. If the society had the first income distribution, what would be the utilitarian argument for redistributing income?

b. Which income distribution would Rawls consider more equitable? Explain.

c. Which income distribution would Nozick consider more equitable? Explain.

A. Wealth has a declining marginal utility. So, redistributing money equally will increase total utility. That is, the benefit that the 10th person gets outweighs the loss suffered by the 1st through 9th people.

B. While he was never known to redistribute his own money while standing behind a veil of ignorance, Rawls would consider the second distribution more equitable. What Rawls is most concerned with is maximizing the benefit of the worst off individual. The worst off individual is better off in the second distribution than the first.

C. Nozick was concerned with contracts. He didn't value inequality for the sake of inequality, nor did he value equality for the sake of equality. He also didn't care about total utility or total wealth in the economy. Anyone arguing otherwise, badly misunderstands Nozick. Nozick would not care which income distribution resulted as long as an individual's income was obtained through voluntary and informed contractual agreements with others. If the 10th person in the first distribution only earned $10,000, then that is all he deserves even if he is the worst off in society. If he wants to exchange more of his goods and services for income, he is free to do so.