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Abstract

This paper introduces a new axiom-the unit consistency axiom-into inequality measurement. This new axiom requires the ordinal inequality rankings (rather than the cardinal indices) to be unaffected when incomes are expressed in different units. I argue that unit consistency is an indispensable axiom for the measurement of income inequality. When unit consistency is combined with decomposability, I show that the unit-consistent decomposable class of inequality measures is a two-parameter extension of the one-parameter generalized entropy class. The extended class accommodates a variety of value judgments and includes different types of inequality measures. Copyright (c) The London School of Economics and Political Science 2006.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0335.2006.00524.x
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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 74 (2007)
Issue (Month): 293 (02)
Pages: 97-111

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Handle: RePEc:bla:econom:v:74:y:2007:i:293:p:97-111

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Cited by:

1. Buhong Zheng, 2007. "Inequality orderings and unit consistency," Social Choice and Welfare, Springer, vol. 29(3), pages 515-538, October.
2. Casilda Lasso de la Vega & Christian Seidl, 2007. "The Impossibility of a Just Pigouvian," Working Papers 69, ECINEQ, Society for the Study of Economic Inequality.
   
   • de la Vega, Casilda Lasso & Seidl, Christian, 2007. "The Impossibility of a Just Pigouvian," Economics Working Papers 2007,10, Christian-Albrechts-University of Kiel, Department of Economics.
3. Lambert, Peter & Zheng, Buhong, 2011. "On the consistent measurement of attainment and shortfall inequality," Journal of Health Economics, Elsevier, vol. 30(1), pages 214-219, January.
4. Dasgupta, Indraneel & Kanbur, Ravi, 2007. "Should Egalitarians Expropriate Philanthropists?," CEPR Discussion Papers 6362, C.E.P.R. Discussion Papers.
   
   • Dasgupta, Indraneel & Kanbur, Ravi, 2007. "Should Egalitarians Expropriate Philanthropists?," Working Papers 126999, Cornell University, Department of Applied Economics and Management.
   • Indraneel Dasgupta, & Ravi Kanbur, . "Should Egalitarians Expropriate Philanthropists?," Discussion Papers 07/13, University of Nottingham, CREDIT.
   • Indraneel Dasgupta & Ravi Kanbur, 2006. "Should Egalitarians Expropriate Philanthropists?," CEDI Discussion Paper Series 06-11, Centre for Economic Development and Institutions(CEDI), Brunel University.
   • Dasgupta, Indraneel & Kanbur, Ravi, 2008. "Should Egalitarians Expropriate Philanthropists?," IZA Discussion Papers 3317, Institute for the Study of Labor (IZA).
5. M. Lasso de la Vega & Ana Urrutia, 2011. "Characterizing how to aggregate the individuals’ deprivations in a multidimensional framework," Journal of Economic Inequality, Springer, vol. 9(2), pages 183-194, June.
6. Mª Casilda Lasso de la Vega & Ana Urrutia & Henar Diez, 2009. "The Bourguignon and Chakravarty multidimensional poverty family: A characterization," Working Papers 109, ECINEQ, Society for the Study of Economic Inequality.
7. Indraneel Dasgupta & Ravi Kanbur, 2011. "Does philanthropy reduce inequality?," Journal of Economic Inequality, Springer, vol. 9(1), pages 1-21, March.
8. Paul Allanson & Dennis Petrie, 2012. "Understanding the vertical equity judgements underpinning health inequality measures," Dundee Discussion Papers in Economics 264, Economic Studies, University of Dundee.
   
   • Allanson, Paul & Petrie, Dennis, 2012. "Understanding the vertical equity judgements underpinning health inequality measures," SIRE Discussion Papers 2012-06, Scottish Institute for Research in Economics (SIRE).
9. Beckman, Steve & James Smith, W. & Zheng, Buhong, 2009. "Measuring inequality with interval data," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 25-34, July.
10. Coral del Río & Olga Alonso-Villar, 2007. "Rankings of Income Distributions: A Note on Intermediate Inequality Indices," Working Papers 68, ECINEQ, Society for the Study of Economic Inequality.
11. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer, vol. 11(2), pages 83-97, June.
12. Ma Casilda Lasso de la Vega & Ana Urrutia & Henar Diez, 2008. "Unit-consistency and polarization of income distributions," Working Papers 100, ECINEQ, Society for the Study of Economic Inequality.
    
    • M-super-a Casilda Lasso de la Vega & Ana Urrutia & Henar Díez, 2010. "Unit Consistency And Bipolarization Of Income Distributions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 65-83, 03.
13. Francisco Azpitarte & Olga Alonso-Villar, 2012. "A Dominance Criterion for Measuring Income Inequality from a Centrist View: The Case of Australia," Melbourne Institute Working Paper Series wp2012n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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