Classical inequality indices, welfare functions, and the dual decomposition
AbstractWe consider the classical inequality measures due to Gini, Bonferroni, and De Vergottini and we present a brief review of the three inequality indices and the associated welfare functions, in the correspondence scheme introduced by Blackorby and Donaldson, and Weymark. The three classical inequality indices incorporate different value judgments in the measurement of inequality, leading to different behavior under income transfers between individuals in the population. The welfare functions associated with the Gini, Bonferroni, and (normalized) De Vergottini indices are Schur-concave OWA functions, with larger weights for lower incomes. We examine the dual decomposition and the orness degree of the three welfare functions in the standard framework of aggregation functions on the [0; 1]n domain, and show that it offers interesting insight on the distinct and complementary nature of the classical inequality indices.
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Bibliographic InfoPaper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 253.
Length: 29 pages
Date of creation: Apr 2012
Date of revision:
income inequality and social welfare; classical Gini; Bonferroni; and De Vergottini inequality indices; welfare functions; aggregation functions; WA and OWA functions; dual decomposition; ornessClassification-JEL: D63; I32;
Other versions of this item:
- Oihana Aristondo & JosŽ Luis Garc’a-Lapresta & Casilda Lasso de la Vega & Ricardo Alberto Marques Pereira, 2012. "Classical inequality indices, welfare functions, and the dual decomposition," DISA Working Papers 2012/06, Department of Computer and Management Sciences, University of Trento, Italy, revised Jun 2012.
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
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