SOCIAL EVALUATION FUNCTIONS, ECONOMIC ISOLATION AND THE SUITS INDEX OF PROGRESSIVITY

We propose a class of social evaluation functions which capture the we ll-being of economically isolated individuals in a society. This speci fication is linked to the important sociological literature on socioec onomic isolation, and to the increasing importance of social exclusion as a basis for the formulation of social policy. From these social ev aluation functions, which obey standard axioms of welfare economics, a ssociated classes of indices of inequality, tax departure from proport ionality, and tax redistribution are derived. An important special cas e of these indices is the popular Suits index of progressivity, for wh ich no social welfare foundation has previously been provided. We illu strate.this interpretation of the Suits indices using the British regi me of personal income taxes and National Insurance contributions; we f ind that they reduce economic isolation by up to 10%. (C) 1998 Elsevie r Science S.A.