On Quasi-Orderings of Income Profiles

In income distributions theory quite often we become interested in developing a criterion that can rank alternative profiles of income. Income profiles cannot be socially ordered if we do not make some prior value judgements. Value judgements, which are generally regarded as ethical statements, cannot be ascertained to be true or false on the basis of factual evidence. In the context of income profile ranking it is a convention to make the following value judgements: social preference for a more ’equitable’ profile and higher incomes, ceteris paribus. These value judgements are referred to as ’equity preference’ and ’efficiency preference’ respectively.