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Measuring Bipolarization, Inequality, Welfare and Poverty

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Author Info
Juan Gabriel Rodríguez () (Universidad Rey Juan Carlos)

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Abstract

This paper analyzes the relationship between bipolarization and inequality, welfare and poverty measures. First, we clarify the similarities and differences between bipolarization and inequality measures. Second, it is shown that bipolarization is the difference between the welfare levels of the richer and poorer income groups when feelings of identification between individuals are based on their utility functions. In fact, bipolarization is interpreted as the welfare of the richer group that is wasted to compensate for income bipolarization. Third, a relationship between bipolarization measurement and the normalized poverty deficit index is established. These findings are applied to the polarization measures of Wolfson (1994), Esteban and Ray (1994) and Lasso de la Vega and Urrutia (2006).

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Publisher Info
Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 39.

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Length: 31 pages
Date of creation: 2006
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Handle: RePEc:inq:inqwps:ecineq2006-39

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Related research
Keywords: bipolarization inequality welfare poverty.

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Find related papers by JEL classification:
D39 - Microeconomics - - Distribution - - - Other
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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  1. Esteban, J. & Gradin, C. & Ray, D., 1999. "Extension of a Measure of Polarization, with an Application to the Income Distribution of Five OECD Countries," Papers 24, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
  2. Conchita D'Ambrosio & Edward N. Wolff, 2001. "Is Wealth Becoming More Polarized in the United States?," Macroeconomics 0106006, EconWPA. [Downloadable!]
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  3. Lambert, Peter J & Aronson, J Richard, 1993. "Inequality Decomposition Analysis and the Gini Coefficient Revisited," Economic Journal, Royal Economic Society, vol. 103(420), pages 1221-27, September. [Downloadable!] (restricted)
  4. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-51, July. [Downloadable!] (restricted)
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  5. Cowell, Frank A, 1980. "On the Structure of Additive Inequality Measures," Review of Economic Studies, Blackwell Publishing, vol. 47(3), pages 521-31, April. [Downloadable!] (restricted)
  6. Juan Prieto-Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, . "Interactions Inequality-Polarization: Characterization Results(*)," Working Papers 15-05 Classification-JEL , Instituto de Estudios Fiscales. [Downloadable!]
  7. Yitzhaki, Shlomo, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, MIT Press, vol. 93(2), pages 321-24, May. [Downloadable!] (restricted)
  8. Wang, You-Qiang & Tsui, Kai-Yuen, 2000. " Polarization Orderings and New Classes of Polarization Indices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 349-63. [Downloadable!] (restricted)
  9. Duclos, Jean-Yves & Echevin, Damien, 2005. "Bi-polarization comparisons," Economics Letters, Elsevier, vol. 87(2), pages 249-258, May. [Downloadable!] (restricted)
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  10. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-58, May.
  11. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-55, June. [Downloadable!] (restricted)
  12. Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, vol. 4(1), pages 98-100, February. [Downloadable!] (restricted)
  13. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, Blackwell Publishing, vol. 43(4), pages 401-21, December.
  14. Chakravarty, Satya R & Majumder, Amita, 2001. "Inequality, Polarisation and Welfare: Theory and Applications," Australian Economic Papers, Blackwell Publishing, vol. 40(1), pages 1-13, March. [Downloadable!] (restricted)
  15. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November. [Downloadable!] (restricted)
    Other versions:
  16. Juan G. Rodríguez & Rafael Salas, . "Extended Bi-Polarization And Inequality Measures," Working Papers 10-03 Classification-JEL , Instituto de Estudios Fiscales. [Downloadable!]
  17. D'Ambrosio, Conchita, 2001. "Household Characteristics and the Distribution of Income in Italy: An Application of Social Distance Measures," Review of Income and Wealth, Blackwell Publishing, vol. 47(1), pages 43-64, March. [Downloadable!] (restricted)
  18. Xiaobo Zhang & Ravi Kanbur, 2001. "What difference do polarisation measures make? an application to China," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(3), pages 85-98, January. [Downloadable!] (restricted)
  19. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, Oxford University Press, vol. 11(2), pages 357-82, May.
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  20. Juan Prieto Rodríguez & Juan Gabriel Rodríguez & Rafael Salas, 2004. "Is an inequality-neutral flat tax reform really neutral?," Economic Working Papers at Centro de Estudios Andaluces E2004/43, Centro de Estudios Andaluces. [Downloadable!]
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  21. Newbery, David, 1970. "A theorem on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 264-266, September. [Downloadable!] (restricted)
  22. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May. [Downloadable!] (restricted)
  23. Hey, John D & Lambert, Peter J, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, MIT Press, vol. 95(3), pages 567-73, November.
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