chapter 20

utility

a measure of happiness or satisfaction

permanent income

a person's normal income

negative income tax

a tax system that collects revenue from high-income households and gives subsidies to low-income households

poverty line

an absolute level of income set by the federal government for eau family size below which family is deemed to be in poverty

social insurance

government policy aimed at protecting people against the risk of adverse events

welfare

government programs that supplement the income of the needy

maximum criterion

the claim that the government should aim to maximum the well-being of the worst- off person in society

poverty rate

the percentage of the population whose family income falls below an absolute level called the poverty line

libertarianism

the political philosophy according o which the government should punish crimes and enforce voluntary agreements but not redistribute income

utilitarianism

the political philosophy according to which the government should choose polices to maximize the total utility of everyone in society

liberalism

the political philosophy according to which the government should chose policies deemed just ,as evaluated by an impartial observer behind a "veil of ignorance"

life cycle

the regular pattern of income variation over a person's life

in-kind transfers

transfers o the poor given in the form of goods and services rather than cash