Comparing degrees of inequality aversion
AbstractWe propose a straightforward dominance procedure for comparing social welfare orderings (SWOs) with respect to the degree of inequality aversion they express. We consider three versions of the procedure: (i) a criterion based on the Lorenz quasi-ordering which we argue to be the ideal version, (ii) a criterion based on a minimalist concept of inequality, and (iii) a criterion based on the relative differentials quasi-ordering. It turns out that the traditional Arrow-Pratt approach is equivalent to the latter two criteria for important classes of SWOs, but that it is profoundly inconsistent with the Lorenz-based criterion. With respect to the problem of combining extreme inequality aversion and monotonicity, criteria (ii) and (iii) identify as extremely inequality averse a set of SWOs that includes leximin as a special case, whereas the Lorenz-based criterion concludes that extreme inequality aversion and monotonicity are incompatible.
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Bibliographic InfoPaper provided by Maastricht University in its series Open Access publications from Maastricht University with number urn:nbn:nl:ui:27-15447.
Date of creation: 2007
Date of revision:
Publication status: Published in Social choice and welfare (2007) v.29, p.405-428
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Other versions of this item:
- Kristof Bosmans, 2005. "Comparing degrees of inequality aversion," Center for Economic Studies - Discussion papers ces0517, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Kristof Bosmans, 2006. "Comparing degrees of inequality aversion," Public Economics Working Paper Series ineqav, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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