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Ranking intersectiong Lorenz Curves

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  • Rolf Aaberge

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Abstract

This paper is concerned with the problem of ranking Lorenz curves in situations where the Lorenz curves intersect and no unambiguous ranking can be attained witout introducing weaker ranking criteria than first-degree Lorenz dominance. To deal with such situations two alternative sequences of nested dominance criteria between Lorenz curves are introduced. At the limit the systems of dominance criteria appear to depend solely on the income share of either the worst-off or the best-off income recipient. This result suggests two alternative strategies for increasing the number of Lorenz curves that can be stricly ordered; one that focuses on changes that take place in the lower part of the income distribution. Furthermore, it is demonstrated that the sequences of dominance criteria characterize two separate systems of nested subfamilies of inequality measures and thus provide a method for identifying the least restrictive social preferences required to reach an unambiguous ranking of Lorenz curves.

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Bibliographic Info

Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 08-2000.

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Length: 30 pages
Date of creation: Jun 2000
Date of revision:
Handle: RePEc:icr:wpicer:08-2000

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Keywords: Lorenz curve; partial orderings; rank-dependent measures of inequality; generalized Gini families of inequality measures; principles of transfers and mean-spread-preserving transformations;

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