The well-being score for Marcella (income $22,000) is 6.5, and the well-being score for Mariko (income $180,000) is 10.2. Across the two of them, total well-being is 16.7. The change in well-being for a $5,000 change in income for Marcella is .5 and for Mariko is .2. What net change in total well-being will occur if $5,000 of Mariko's income is taken as tax and transferred to Marcella through an income transfer?

Question

Quizplus · Accepted Answer

If $5,000 of Mariko's income is transferred to Marcella, Mariko's income will reduce to $175,000, and Mariko's well-being score will fall to 10.0, a decrease of .2. Marcella's income will increase to $27,000, and Marcella's well-being score will increase to 7.0, an increase of .5. Hence, the net change in well-being will be .3, and the new well-being score will be 17.

The Well-Being Score for Marcella (Income $22,000) Is 6