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The absence of deprivation as a measure of social well-being: An empirical investigation

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  • Magdalou, Brice
  • Moyes, Patrick

Abstract

The generalised Lorenz criterion is widely used for making welfare comparisons within and across countries on the basis of their income distributions. Experimental studies have challenged this way of proceeding by showing that the principle of transfers, which underlies the generalised Lorenz criterion, does not meet with widespread agreement among the public that theorists would have expected. We propose to substitute the non-deprivation quasi-ordering introduced by Chakravarty (1997) for the generalised Lorenz criterion. This criterion is less demanding than the generalised Lorenz criterion as it builds on a weaker version of the principle of transfers and it is therefore more likely to be accepted by the public. We use income data from the Luxembourg Income Study for 17 countries in order to contrast the generalised Lorenz and the non-deprivation criteria. Although the non-deprivation quasi-ordering is less decisive than the generalised Lorenz criterion, it is shown that the former approximates the latter surprisingly well.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 116 (2012)
Issue (Month): 1 ()
Pages: 75-79

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Handle: RePEc:eee:ecolet:v:116:y:2012:i:1:p:75-79

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Web page: http://www.elsevier.com/locate/ecolet

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Keywords: Progressive transfers; Welfare; Inequality; Deprivation; Lorenz dominance;

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References

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  1. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  2. Beach, Charles M & Davidson, Russell, 1983. "Distribution-Free Statistical Inference with Lorenz Curves and Income Shares," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 723-35, October.
  3. Brice Magdalou & Patrick Moyes, 2009. "Deprivation, welfare and inequality," Social Choice and Welfare, Springer, vol. 32(2), pages 253-273, February.
  4. Weiss, Y. & Fershtman, C., 1997. "Social Status and Economic Performance: A Survey," Papers 19-97, Tel Aviv.
  5. Beach, Charles M. & Chow, K. Victor & Formby, John P. & Slotsve, George A., 1994. "Statistical inference for decile means," Economics Letters, Elsevier, vol. 45(2), pages 161-167, June.
  6. Bishop, John A & Chakraborti, S & Thistle, Paul D, 1989. "Asymptotically Distribution-Free Statistical Inference for Generalized Lorenz Curves," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 725-27, November.
  7. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, October.
  8. Kaur, Amarjot & Prakasa Rao, B.L.S. & Singh, Harshinder, 1994. "Testing for Second-Order Stochastic Dominance of Two Distributions," Econometric Theory, Cambridge University Press, vol. 10(05), pages 849-866, December.
  9. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
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Cited by:
  1. Magali JAOUL-GRAMMARE & Brice MAGDALOU, 2013. "Opportunities in Higher Education : An Application to France," Annales d'Economie et de Statistique, ENSAE, issue 111-112, pages 12.

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