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Multidimensional polarization for ordinal data

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  • Martyna Kobus

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    (Institute of Economics, Polish Academy of Sciences)

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    Abstract

    Western governments increasingly place more emphasis on non-income dimensions in measuring national well-being (e.g. the UK, France). Not only averages, but the characteristics of the whole distribution (e.g. inequalities) are taken into consideration. Commonly used data such as life satisfaction, declared health status or level of education, however, are ordinal in nature and the fundamental problem of measuring inequality with ordinal variables exists. Here, a class of multidimensional inequality indices for ordinal data is characterized by inequality axioms and based on the characterization theorem an inequality measure is proposed. The method ensures that the index is also attribute decomposable, that is, we can estimate the contribution to overall inequality from inequality in dimensions and from their association. It was found for the period 1972-2010 in the US, excluding 1985 that inequality in perceived happiness contributed more to overall inequality than health inequality. Joint inequality in health and happiness was significantly higher in the first half of the study period (0.3 vs. 0.2). In the 1970s and 1980s most healthy people were also happier and this positive association increased inequality by around 20 percent. This trend was reversed in the late 1980s when the contribution of association became negative. This trend for the healthiest to no longer be the happiest persisted with the exception of three years.

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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2014-326.pdf
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    Bibliographic Info

    Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 326.

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    Length: 22 pages
    Date of creation: Mar 2014
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    Handle: RePEc:inq:inqwps:ecineq2014-326

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    Keywords: Multidimensional inequality; ordinal data; copula function.;

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    1. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-31, November.
    2. Ramses H. Abul Naga & Pierre-Yves Geoffard, 2006. "Decomposition of bivariate inequality indices by attributes," LSE Research Online Documents on Economics 6541, London School of Economics and Political Science, LSE Library.
    3. Kobus, Martyna & Miłoś, Piotr, 2012. "Inequality decomposition by population subgroups for ordinal data," Journal of Health Economics, Elsevier, vol. 31(1), pages 15-21.
    4. Allison, R. Andrew & Foster, James E., 2004. "Measuring health inequality using qualitative data," Journal of Health Economics, Elsevier, vol. 23(3), pages 505-524, May.
    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    7. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    8. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
    9. Benedicte Apouey, 2007. "Measuring health polarization with self-assessed health data," Health Economics, John Wiley & Sons, Ltd., vol. 16(9), pages 875-894.
    10. Meng, Xin & Miller, Paul, 1995. "Occupational Segregation and Its Impact on Gender Wage Discrimination in China's Rural Industrial Sector," Oxford Economic Papers, Oxford University Press, vol. 47(1), pages 136-55, January.
    11. Abul Naga, Ramses H. & Yalcin, Tarik, 2008. "Inequality measurement for ordered response health data," Journal of Health Economics, Elsevier, vol. 27(6), pages 1614-1625, December.
    12. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
    13. Jensen, P. & Nielsen, H.S., 1996. "Child Labour or School Attendance? Evidence from Zambia," Papers 96-14, Centre for Labour Market and Social Research, Danmark-.
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