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Rankings of income distributions: a note on intermediate inequality indices

In: Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting

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  • Coral del Río
  • Olga Alonso-Villar

Abstract

The purpose of this paper is to analyze the advantages and disadvantages of several intermediate inequality measures, paying special attention to the unit-consistency axiom proposed by Zheng (2007). First, we demonstrate why one of the most referenced intermediate indices, proposed by Bossert and Pfingsten (1990), is not unit-consistent. Second, we explain why the invariance criterion proposed by Del Río and Ruiz-Castillo (2000), recently generalized by Del Río and Alonso-Villar (2008), leads instead to inequality measures that are unaffected by the currency unit. Third, we show that the intermediate measures proposed by Kolm (1976) may also violate unit-consistency. Finally, we reflect on the concept of intermediateness behind the above notions together with that proposed by Krtscha (1994). Special attention is paid to the geometric interpretations of our results.

Suggested Citation

  • Coral del Río & Olga Alonso-Villar, 2008. "Rankings of income distributions: a note on intermediate inequality indices," Research on Economic Inequality, in: Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting, pages 213-229, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-2585(08)16010-0
    DOI: 10.1016/S1049-2585(08)16010-0
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    References listed on IDEAS

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    1. Bossert, Walter & Pfingsten, Andreas, 1990. "Intermediate inequality: concepts, indices, and welfare implications," Mathematical Social Sciences, Elsevier, vol. 19(2), pages 117-134, April.
    2. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August.
    3. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June.
    4. Buhong Zheng, 2007. "Unit‐Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, vol. 74(293), pages 97-111, February.
    5. Claudio Zoli, 2012. "Characterizing Inequality Equivalence Criteria," Working Papers 32/2012, University of Verona, Department of Economics.
    6. Coral del RÎo & Javier Ruiz-Castillo, 2000. "Intermediate inequality and welfare," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 17(2), pages 223-239.
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    Cited by:

    1. Francisco Azpitarte & Olga Alonso-Villar, 2011. "Ray-invariant intermediate inequality measures: A Lorenz dominance criterion," Working Papers 226, ECINEQ, Society for the Study of Economic Inequality.
    2. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(2), pages 83-97, June.
    3. 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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    JEL classification:

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

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