Adjusting Incomes for Needs: Can One Avoid Equivalence Scales?
AbstractThe aim of the paper is to provide guidelines in order to make meaningful comparisons of heterogeneous distributions when incomes are adjusted in order to accommodate differences in needs. We emphasize that the choice of the equivalent income function and the system of weights associated to the equivalent incomes affects significantly the conclusions to be drawn. Introducing simple but intuitively appealing normative conditions, we show that adjusting incomes by a scale factor and weighting the resulting equivalent incomes by the same factor -- as was proposed by Pyatt, ``Social evaluation criteria'', in C. Dagum and M. Zenga (Eds.), Income and Wealth Distribution, Inequality and Poverty, Springer-Verlag, 1990 -- does constitute the only consistent method of making comparisons of relative inequality and/or welfare across populations of heterogeneous households. When the focus is on comparisons in terms of absolute inequality, then lump-sum equivalent income functions and equal weights constitute the only admissible adjustment procedure.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0917.
Date of creation: 01 Aug 2000
Date of revision:
Contact details of provider:
Phone: 1 212 998 3820
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paolo Figini, 1998. "Inequality Measures, Equivalence Scales and Adjustment for Household Size and Composition," Economics Technical Papers, Trinity College Dublin, Department of Economics 988, Trinity College Dublin, Department of Economics.
- Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer, Springer, vol. 7(6), pages 619-640, December.
- 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, vol. 44(2), pages 77-124, April.
- Hammond, Peter J, 1976. "Equity, Arrow's Conditions, and Rawls' Difference Principle," Econometrica, Econometric Society, Econometric Society, vol. 44(4), pages 793-804, July.
- Peter Lambert & Xavi Ramos, 2001.
"Welfare Comparisons: Sequential Procedures for Heterogeneous Population,"
CESifo Working Paper Series
519, CESifo Group Munich.
- Lambert, Peter J & Ramos, Xavier, 2002. "Welfare Comparisons: Sequential Procedures for Heterogeneous Populations," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 69(276), pages 549-62, November.
- Peter J. Lambert & Xavier Ramos, 2001. "Welfare comparisons: sequential procedures for heterogenous populations," Working Papers wp0114, Department of Applied Economics at Universitat Autonoma of Barcelona.
- Udo Ebert & Patrick Moyes, 2002.
"Welfare, inequality and the transformation of incomes the case of weighted income distributions,"
Journal of Economics, Springer,
Springer, vol. 77(1), pages 9-50, December.
- Udo Ebert & Patrick Moyes, 2002. "Welfare, inequality and the transformation of incomes the case of weighted income distributions," Journal of Economics, Springer, Springer, vol. 9(1), pages 9-50, December.
- Julio LÃ³pez-Laborda & Jorge Onrubia, 2005.
"Personal Income Tax Decentralization, Inequality, and Social Welfare,"
Public Finance Review, ,
, vol. 33(2), pages 213-235, March.
- Julio López Laborda & Jorge Onrubia Fernández, 2004. "Personal Income Tax Decentralization, Inequality and Social Welfare," Economic Working Papers at Centro de Estudios Andaluces E2004/17, Centro de Estudios Andaluces.
- Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, Elsevier, vol. 88(1-2), pages 175-208, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.