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Multidimensional Polarization of Income and Wealth: The Extent and Intensity of Poverty and Affluence

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  • Bettina Scherg

    (LEUPHANA University Lüneburg,Department of Economic, Behaviour and Law Sciences, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)))

Abstract

Income and wealth are important determinants of individual economic well-being because they are a fundamental resource for consumption. Due to increasing inequality the distribution of income and wealth has moved more and more into the focus of scientific and political attention. The aim of this paper is to determine the extent and the intensity of multidimensional polarization of both income and wealth. Individual well-being is modeled by a well-being function directly affected by income and wealth. In order to have a flexible functional form for the well-being function the translog function is chosen. The parameters of the well-being function are not chosen arbitrarily but determined by the German population. From the perspective of an interdependent relation of the polarization dimensions income and wealth, the extent of multidimensional poverty and affluence is represented by the number of people who are assigned to be multidimensionally poor or affluent. The polarization intensity is measured by the multidimensional mean minimum polarization gap (2DGAP). This polarization intensity measure provides a transparent representation of each singular attribute and account for their possible interdependent relations. The data basis for the empirical investigation is the SAVE study from 2010 for Germany.

Suggested Citation

  • Bettina Scherg, 2014. "Multidimensional Polarization of Income and Wealth: The Extent and Intensity of Poverty and Affluence," FFB-Discussionpaper 98, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    • Handle: RePEc:leu:wpaper:98
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    Cited by:

    1. Joachim Merz & Lars Rusch, 2015. "MICSIM-4j - A General Microsimulation Model User Guide (Version 1.1)," FFB-Discussionpaper 100, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    2. Joachim Merz & Tim Rathjen, 2016. "Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? - The German Case," FFB-Discussionpaper 102, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    3. Joachim Merz, 2015. "Sind Rentner zufriedener? Eine Panelanalyse von Antizipations- und Adaptionseffekten," FFB-Discussionpaper 99, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    4. Mirko Felchner, 2015. "Einkommensdynamik bei Selbständigen als Freie Berufe und abhängig Beschäftigte Eine dynamische Paneldatenschätzung mit Daten des Sozio-oekonomischen Panels," FFB-Discussionpaper 101, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.

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    More about this item

    Keywords

    Multidimensional polarization; polarization intensity; income; wealth; poverty; affluence; translog well-being function; Minimum Multidimensional Polarization Gap (2DGAP);
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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