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Ordinal Welfare Comparisons with Multiple Discrete Indicators: A First Order Dominance Approach and Application to Child Poverty

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Author Info

  • Channing Arndt

    (Department of Economics, University of Copenhagen)

  • Roberta Distante

    (Department of Economics, University of Copenhagen)

  • M. Azhar Hussain

    (Department of Economics, University of Copenhagen)

  • Lars Peter Østerdal

    (Department of Economics, University of Copenhagen)

  • Pham Lan Huong

    (Central Institute for Economic Management (CIEM), Vietnam)

  • Maimuna Ibraimo

    (Ministry of Planning and Development (MPD), Mozambique)

Abstract

We develop an ordinal method for making welfare comparisons between populations with multidimensional discrete well-being indicators observed at the micro level. The approach assumes that, for each well-being indicator, the levels can be ranked from worse to better; however, no assumptions are made about relative importance of any dimension nor about complementarity/substitutability relationships between dimensions. The method is based on the concept of multidimensional first order dominance. We introduce a rapid and reliable algorithm for empirically determining whether one population dominates another on the basis of available binary indicators by drawing upon linear programming theory. These approaches are applied to household survey data from Vietnam and Mozambique with a focus on child poverty comparisons over time and between regions.

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Bibliographic Info

Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 11-13.

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Length: 23 pages
Date of creation: Apr 2011
Date of revision:
Handle: RePEc:kud:kuiedp:1113

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  1. Nicolas Gravel & Abhiroop Mukhopadhyay, 2007. "Is India Better off Today than 15 Years ago? A Robust Multidimensional Answer," IDEP Working Papers, Institut d'economie publique (IDEP), Marseille, France 0704, Institut d'economie publique (IDEP), Marseille, France, revised 18 May 2007.
  2. Alkire, Sabina, 2008. "Choosing Dimensions: The Capability Approach and Multidimensional Poverty," MPRA Paper 8862, University Library of Munich, Germany.
  3. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, Elsevier, vol. 42(1), pages 67-80, September.
  4. Atkinson, Anthony B & Bourguignon, Francois, 1982. "The Comparison of Multi-Dimensioned Distributions of Economic Status," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(2), pages 183-201, April.
  5. Christoffer Sonne-Schmidt & Finn Tarp & Lars Peter Østerdal, 2008. "Ordinal Comparison of Multidimensional Deprivation: theory and application," Discussion Papers 08-33, University of Copenhagen. Department of Economics.
  6. Nicolas Gravel & Patrick Moyes & Beno�T Tarroux, 2009. "Robust International Comparisons of Distributions of Disposable Income and Regional Public Goods," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 76(303), pages 432-461, 07.
  7. Johannes Gräb & Michael Grimm, 2007. "Robust Multiperiod Poverty Comparisons," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2007/12, DIAL (Développement, Institutions et Mondialisation).
  8. Bourguignon, F. & Chakravarty, S.R., 1998. "The Measurement of Multidimensional Poverty," DELTA Working Papers, DELTA (Ecole normale supérieure) 98-12, DELTA (Ecole normale supérieure).
  9. Duclos, Jean-Yves & Sahn, David & Younger, Stephen D., 2001. "Robust Multidimensional Poverty Comparisons," Cahiers de recherche, Université Laval - Département d'économique 0115, Université Laval - Département d'économique.
  10. Roelen, Keetie & Gassmann, Franziska, 2008. "Measuring Child Poverty and Well-Being: a literature review," MPRA Paper 8981, University Library of Munich, Germany.
  11. Alkire, Sabina & Foster, James, 2011. "Counting and multidimensional poverty measurement," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7-8), pages 476-487, August.
  12. Ian Crawford, 2005. "A nonparametric test of stochastic dominance in multivariate distributions," School of Economics Discussion Papers, School of Economics, University of Surrey 1205, School of Economics, University of Surrey.
  13. Vijay S. Bawa & Eric B. Lindenberg & Lawrence C. Rafsky, 1979. "An Efficient Algorithm to Determine Stochastic Dominance Admissible Sets," Management Science, INFORMS, INFORMS, vol. 25(7), pages 609-622, July.
  14. Nicole Rippin, 2010. "Poverty Severity in a Multidimensional Framework: The Issue of Inequality between Dimensions," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 47, Courant Research Centre PEG.
  15. Østerdal, Lars Peter, 2010. "The mass transfer approach to multivariate discrete first order stochastic dominance: Direct proof and implications," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1222-1228, November.
  16. Yélé Maweki Batana & Jean-Yves Duclos, 2010. "Comparing Multidimensional Poverty with Qualitative Indicators of Well-Being," Cahiers de recherche, CIRPEE 1004, CIRPEE.
  17. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198281931, October.
  18. Channing Arndt & Andres Garcia & Finn Tarp & James Thurlow, 2012. "Poverty Reduction and Economic Structure: Comparative Path Analysis for Mozambique and Vietnam," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(4), pages 742-763, December.
  19. Levhari, David & Paroush, Jacob & Peleg, Bezalel, 1975. "Efficiency Analysis for Multivariate Distributions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 42(1), pages 87-91, January.
  20. Muller, Christophe & Trannoy, Alain, 2011. "A dominance approach to the appraisal of the distribution of well-being across countries," Journal of Public Economics, Elsevier, Elsevier, vol. 95(3), pages 239-246.
  21. Keetie Roelen & Franziska Gassmann & Chris Neubourg, 2010. "Child Poverty in Vietnam: Providing Insights Using a Country-Specific and Multidimensional Model," Social Indicators Research, Springer, Springer, vol. 98(1), pages 129-145, August.
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Cited by:
  1. Range, Troels Martin & Østerdal, Lars Peter, 2013. "Checking bivariate first order dominance," Discussion Papers of Business and Economics 9/2013, Department of Business and Economics, University of Southern Denmark.
  2. Sonne-Schmidt, Christoffer & Tarp, Finn & Osterdal, Lars Peter, 2013. "Ordinal multidimensional inequality," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  3. Hussain, M. Azhar & Jørgensen, Mette Møller & Østerdal, Lars Peter, 2014. "Refining Population Health Comparisons: A Multidimensional First Order Dominance Approach," COHERE Working Paper 2014:5, COHERE - Centre of Health Economics Research, University of Southern Denmark.

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