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Restricted and Unrestricted Dominance for Welfare, Inequality and Poverty Orderings

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Duclos, Jean-Yves
Makdissi, Paul

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Abstract

This paper extends the previous literature on the normative links between the measurement of poverty, social welfare and inequality. We show how, when the range of possible poverty lines is unbounded above, a robust ranking of absolute poverty may be interpreted as a robust ranking of social welfare, and a robust ranking of relative poverty may be interpreted as a robust ranking of inequality for any order of stochastic dominance. This interpretation is also valid when the maximum poverty line is bounded and for certain orders of stochastic dominance, so long as social welfare and inequality judgements are "censored". We also develop new criteria of restricted inequality dominance, and find that they warn against the use of some popular indices of relative poverty and censored inequality. Finally, we illustrate geometrically how the new criteria of restricted inequality dominance extends the rankings power of previously proposed dominance criteria.

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Paper provided by Université Laval - Département d'économique in its series Cahiers de recherche with number 0001.

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Date of creation: 2000
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Handle: RePEc:lvl:laeccr:0001

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Related research
Keywords: Welfare Inequality Poverty Stochastic Dominance

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Find related papers by JEL classification:
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Whitmore, G A, 1970. "Third-Degree Stochastic Dominance," American Economic Review, American Economic Association, vol. 60(3), pages 457-59, June. [Downloadable!] (restricted)
  2. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-77, January. [Downloadable!] (restricted)
  3. Paul Makdissi & Jean-Yves Duclos, 2001. "Restricted Inequality and Relative Poverty," Cahiers de recherche 01-06, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
    Other versions:
  4. Ravallion, Martin, 1994. "Measuring Social Welfare with and without Poverty Lines," American Economic Review, American Economic Association, vol. 84(2), pages 359-64, May.
  5. Donaldson, David & Weymark, John A, 1986. "Properties of Fixed-Population Poverty Indices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 667-88, October. [Downloadable!] (restricted)
  6. Buhong Zheng, 1999. "On the power of poverty orderings," Social Choice and Welfare, Springer, vol. 16(3), pages 349-371. [Downloadable!] (restricted)
  7. Zheng, Buhong, 1997. " Aggregate Poverty Measures," Journal of Economic Surveys, Blackwell Publishing, vol. 11(2), pages 123-62, June. [Downloadable!] (restricted)
  8. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Blackwell Publishing, vol. 54(3), pages 485-97, July. [Downloadable!] (restricted)
  9. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April. [Downloadable!] (restricted)
  10. Immervoll H & O'Donoghue C & Sutherland H, 1999. "An Introduction to EUROMOD," EUROMOD Working Papers em0/99, EUROMOD at the Institute for Social and Economic Research. [Downloadable!]
  11. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, vol. 68(6), pages 1435-1464, November.
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  12. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  13. Blackorby, Charles & Donaldson, David, 1978. "Measures of relative equality and their meaning in terms of social welfare," Journal of Economic Theory, Elsevier, vol. 18(1), pages 59-80, June. [Downloadable!] (restricted)
  14. Davies James & Hoy Michael, 1994. "The Normative Significance of Using Third-Degree Stochastic Dominance in Comparing Income Distributions," Journal of Economic Theory, Elsevier, vol. 64(2), pages 520-530, December. [Downloadable!] (restricted)
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  15. Atkinson, A B, 1987. "On the Measurement of Poverty," Econometrica, Econometric Society, vol. 55(4), pages 749-64, July. [Downloadable!] (restricted)
  16. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February. [Downloadable!] (restricted)
  17. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March. [Downloadable!] (restricted)
  18. 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)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Duclos, Jean-Yves & Makdissi, Paul & Wodon, Quentin, 2003. "Poverty-Efficient Transfer Programs: The Role of Targeting and Allocation Rules," Cahiers de recherche 0305, CIRPEE. [Downloadable!]
  2. Sami Bibi & Jean-Yves Duclos, 2003. "Equity and Policy Effectiveness with Imperfect Targeting," Cahiers de recherche 0335, CIRPEE. [Downloadable!]
    Other versions:
  3. William C. Horrace & Joseph T. Marchand & Timothy M. Smeeding, 2005. "Ranking Inequality: Applications of Multivariate Subset Selection," Center for Policy Research Working Papers 70, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
    Other versions:
  4. Alex Siméon & Dorothée Boccanfuso, 2006. "Dynamique de la pauvreté en Haïti et ses déterminants," Cahiers de recherche 06-15, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
  5. Jean-Yves Duclos & Paul Makdissi & Quentin Wodon, 2004. "Socially-Improving Tax Reforms," Cahiers de recherche 0401, CIRPEE. [Downloadable!]
    Other versions:
  6. Paul Makdissi & Quentin Wodon & Jean-Yves Duclos, 2001. "Poverty-dominant program reforms: the role of targeting and allocation rules," Cahiers de recherche 02-11, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke, revised 2004. [Downloadable!]
    Other versions:
  7. Paul Makdissi & Quentin Wodon, 2004. "Robust Comparisons of Natural Resources Depletion Indices," Economics Bulletin, Economics Bulletin, vol. 9(2), pages 1-9. [Downloadable!]
    Other versions:
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