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An axiomatic characterization of the Theil inequality ordering

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  • Casilda Lasso de la Vega
  • Ana Urrutia
  • Oscar Volij

Abstract

We axiomatically characterize the Theil ordering of income inequality. In addition to the uncontroversial axioms of anonymity, homogeneity, replication invariance, strong directedness, and a standard continuity property, we appeal to both an independence and a decomposability axioms. These two axioms are ordinal implications of Theil decomposability, the central axiom in previous characterizations of the Theil index. To the best of our knowledge, the present is the first fully ordinal characterization of this index. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Casilda Lasso de la Vega & Ana Urrutia & Oscar Volij, 2013. "An axiomatic characterization of the Theil inequality ordering," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(3), pages 757-776, November.
    • Handle: RePEc:spr:joecth:v:54:y:2013:i:3:p:757-776
    DOI: 10.1007/s00199-012-0739-6
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    1. Lasso de la Vega, Casilda & Volij, Oscar, 2013. "A simple proof of Foster's (1983) characterization of the Theil measure of inequality," Economic Modelling, Elsevier, vol. 35(C), pages 940-943.

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    More about this item

    Keywords

    Income inequality; Theil index; Decomposability ; Axiomatic characterization; D63;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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