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The Principle of Strong Diminishing Transfer

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  • Chateauneuf, Alain
  • Gajdos, Thibault
  • Wilthien, Pierre-Henry

Abstract

We reconsider the principles of diminishing transfer (introduced by Kolm [1976]) and dual diminishing transfer (introduced by Mehran [1976]). It appears that if a Rank Dependent Expected Utility (RDEU) maximizer respects the principle of diminishing (resp. dual diminishing) transfer, then he behaves in accordance with the Expected Utility model (resp. Yaari's dual model).This leads us to define the principle of strong diminishing transfer, which is a combination of the principles of diminishing and dual diminishing transfer. We give necessary conditions for a RDEU maximizer to respect this principle.These results are applied to the problem of inequality measurement.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 103 (2002)
Issue (Month): 2 (April)
Pages: 311-333

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Handle: RePEc:eee:jetheo:v:103:y:2002:i:2:p:311-333

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Web page: http://www.elsevier.com/locate/inca/622869

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References

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  1. Eeckhoudt, Louis & Gollier, Christian & Schneider, Thierry, 1995. "Risk-aversion, prudence and temperance: A unified approach," Economics Letters, Elsevier, vol. 48(3-4), pages 331-336, June.
  2. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
  3. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
  4. Bossert, Walter, 1990. "An axiomatization of the single-series Ginis," Journal of Economic Theory, Elsevier, vol. 50(1), pages 82-92, February.
  5. Claudio Zoli, 1999. "Intersecting generalized Lorenz curves and the Gini index," Social Choice and Welfare, Springer, vol. 16(2), pages 183-196.
  6. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
  7. Hoy, M. & Davies, J., 1991. "The Normative Significance of Using Third-Degree Stochastic Dominance in Comparing Income Distributions," Working Papers 1991-8, University of Guelph, Department of Economics and Finance.
  8. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  9. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
  10. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  11. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
  12. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  13. Miles S. Kimball, 1989. "Precautionary Saving in the Small and in the Large," NBER Working Papers 2848, National Bureau of Economic Research, Inc.
  14. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July.
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Citations

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Cited by:
  1. Fabio Maccheroni & Pietro Muliere & Claudio Zoli, 2005. "Inverse stochastic orders and generalized Gini functionals," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 529-559.
  2. Aaberge, Rolf, 2008. "Ranking Intersecting Lorenz Curves," IZA Discussion Papers 3852, Institute for the Study of Labor (IZA).
  3. Stéphane Mussard, 2007. "Between-Group Pigou Dalton Transfers," Cahiers de recherche 07-06, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  4. Stefananescu, Stefan, 2008. "Measuring the Socio-Economic Bipolarization Phenomenon," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 149-161, March.
  5. Paul Makdissi & Stéphane Mussard, 2006. "Analyzing the Impact of Indirect Tax Reforms on Rank Dependant Social Welfare Functions: A Positional Dominance Approach," Cahiers de recherche 06-02, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  6. Michel Le Breton & Eugenio Peluso, 2009. "Third-degree stochastic dominance and inequality measurement," Journal of Economic Inequality, Springer, vol. 7(3), pages 249-268, September.
  7. Peter Lambert & Giuseppe Lanza, 2006. "The effect on inequality of changing one or two incomes," Journal of Economic Inequality, Springer, vol. 4(3), pages 253-277, December.
  8. Mornet, Pauline & Zoli, Claudio & Mussard, Stéphane & Sadefo-Kamdem, Jules & Seyte, Françoise & Terraza, Michel, 2013. "The (α, β)-multi-level α-Gini decomposition with an illustration to income inequality in France in 2005," Economic Modelling, Elsevier, vol. 35(C), pages 944-963.
  9. Peter J. Lambert & Giuseppe Lanza, 2003. "The effect on inequality of changing one or two incomes," IFS Working Papers W03/15, Institute for Fiscal Studies.
  10. Claudio Zoli, 2002. "Inverse stochastic dominance, inequality measurement and Gini indices," Journal of Economics, Springer, vol. 9(1), pages 119-161, December.
  11. Wakker, Peter P., 2005. "Decision-foundations for properties of nonadditive measures: general state spaces or general outcome spaces," Games and Economic Behavior, Elsevier, vol. 50(1), pages 107-125, January.
  12. Bosmans, Kristof, 2007. "Income inequality, quasi-concavity, and gradual population shifts," Mathematical Social Sciences, Elsevier, vol. 53(1), pages 29-45, January.

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