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Welfare Comparisons: Sequential Procedures for Heterogeneous Population

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  • Peter Lambert
  • Xavi Ramos

Abstract

Some analysts use sequential dominance criteria, and others use equivalence scales in combination with non-sequential dominance tests, to make welfare comparisons of joint distributions of income and needs. In this paper we present a new sequential procedure which copes with situations in which sequential dominance fails. We also demonstrate that the recommendations deriving from the sequential approach are valid for distributions of equivalent income whatever equivalence scale the analyst might adopt. Thus the paper marries together the sequential and equivalizing approaches, seen as alternatives in much previous literature. All results are specified in forms which allow for demographic differences in the populations being compared.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2001/wp-cesifo-2001-07/cesifo_wp519.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 519.

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Date of creation: 2001
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Handle: RePEc:ces:ceswps:_519

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  1. Banks, James & Johnson, Paul, 1994. "Equivalence Scale Relativities Revisited," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(425), pages 883-90, July.
  2. Ebert U., 1996. "Income inequality and differences in household size," Mathematical Social Sciences, Elsevier, Elsevier, vol. 31(1), pages 57-58, February.
  3. Patrick MOYES (GREThA et IDEP Marseille), 2011. "Comparisons of Heterogeneous Distributions and Dominance Criteria," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2011-23, Groupe de Recherche en Economie Théorique et Appliquée.
  4. Whitmore, G A, 1970. "Third-Degree Stochastic Dominance," American Economic Review, American Economic Association, American Economic Association, vol. 60(3), pages 457-59, June.
  5. Ok, Efe A. & Lambert, Peter J., 1999. "On evaluating social welfare by sequential generalized Lorenz dominance," Economics Letters, Elsevier, Elsevier, vol. 63(1), pages 45-53, April.
  6. Fisher, Franklin M, 1987. "Household Equivalence Scales and Interpersonal Comparisons," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 519-24, July.
  7. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  8. Udo Ebert & Patrick Moyes, 2000. "Adjusting Incomes for Needs: Can One Avoid Equivalence Scales?," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 0917, Econometric Society.
  9. Ebert, Udo, 2000. "Sequential Generalized Lorenz Dominance and Transfer Principles," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 52(2), pages 113-22, April.
  10. M. Fleurbaey & C. Hagneré & A. Trannoy, 1998. "Welfare comparisons with bounded equivalence scales," THEMA Working Papers, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise 98-23, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  11. Chambaz, Christine & Maurin, Eric, 1998. "Atkinson and Bourguignon's Dominance Criteria: Extended and Applied to the Measurement of Poverty in France," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 497-513, December.
  12. Atkinson, A. B., 1990. "Public economics and the economic public," European Economic Review, Elsevier, Elsevier, vol. 34(2-3), pages 225-248, May.
  13. Jenkins, Stephen P & Lambert, Peter J, 1993. "Ranking Income Distributions When Needs Differ," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 337-56, December.
  14. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, Elsevier, vol. 42(1), pages 67-80, September.
  15. Bishop, John A. & Formby, John P. & Thistle, Paul D., 1991. "Rank dominance and international comparisons of income distributions," European Economic Review, Elsevier, Elsevier, vol. 35(7), pages 1399-1409, October.
  16. Udo Ebert, 1999. "Using equivalent income of equivalent adults to rank income distributions," Social Choice and Welfare, Springer, Springer, vol. 16(2), pages 233-258.
  17. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 44(2), pages 77-124, April.
  18. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 64(254), pages 233-44, May.
  19. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, Elsevier, vol. 12(3), pages 416-442, June.
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Cited by:
  1. Magne Mogstad, 2007. "Measuring Income Inequality under Restricted Interpersonal Comparability," Discussion Papers, Research Department of Statistics Norway 498, Research Department of Statistics Norway.
  2. Moyes, Patrick, 2012. "Comparisons of heterogeneous distributions and dominance criteria," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(4), pages 1351-1383.
  3. Ooghe, Erwin, 2007. "Sequential dominance and weighted utilitarianism," Economics Letters, Elsevier, Elsevier, vol. 94(2), pages 208-212, February.
  4. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, Springer, vol. 69(1), pages 55-67, July.
  5. Claudio Zoli & Peter Lambert, 2012. "Sequential procedures for poverty gap dominance," Social Choice and Welfare, Springer, Springer, vol. 39(2), pages 649-673, July.
  6. Ooghe, Erwin & Lambert, Peter, 2006. "On bounded dominance criteria," Mathematical Social Sciences, Elsevier, Elsevier, vol. 52(1), pages 15-30, July.
  7. Ernesto Savaglio, 2007. "On multidimensional inequality with variable distribution mean," Department of Economics University of Siena, Department of Economics, University of Siena 522, Department of Economics, University of Siena.

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