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On Bounded Dominance Criteria

Author

Listed:
  • Erwin Ooghe

    (Catholic University of Leuven)

  • Peter J. Lambert

    (University of Oregon Economics Department)

Abstract

A well-known criterion to make heterogeneous welfare comparisons is Atkinson and Bourguignon’s (1987) sequential generalized Lorenz dominance (SGLD) criterion. Recently, Fleurbaey, Hagneré and Trannoy (2003) convincingly argue that it contains unreasonable household utility profiles and suggest to put (lower and upper) bounds on the needs of the different household types. First, we generalize Atkinson and Bourguignon’s SGLD criterion, by introducing lower bounds in the household utility profiles. Second, we propose a new SGLD criterion by introducing upper bounds in a similar way. Third, we impose lower and upper bounds simultaneously and obtain a criterion which is intermediate between Ebert’s (1999) equivalence scale weighted approach and Atkinson and Bourguignon’s (1987) SGLD approach.

Suggested Citation

  • Erwin Ooghe & Peter J. Lambert, 2005. "On Bounded Dominance Criteria," University of Oregon Economics Department Working Papers 2005-6, University of Oregon Economics Department, revised 01 May 2005.
    • Handle: RePEc:ore:uoecwp:2005-6
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    File URL: http://economics.uoregon.edu/papers/UO-2005-6_Lambert_Dominance.pdf
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    References listed on IDEAS

    as
    1. Fleurbaey, Marc & Hagnere, Cyrille & Trannoy, Alain, 2003. "Welfare comparisons with bounded equivalence scales," Journal of Economic Theory, Elsevier, vol. 110(2), pages 309-336, June.
    2. Atkinson, A B, 1992. "Measuring Poverty and Differences in Family Composition," Economica, London School of Economics and Political Science, vol. 59(233), pages 1-16, February.
    3. Lambert, Peter J & Ramos, Xavier, 2002. "Welfare Comparisons: Sequential Procedures for Heterogeneous Populations," Economica, London School of Economics and Political Science, vol. 69(276), pages 549-562, November.
    4. Patrick Moyes, 1999. "Comparaisons de distributions hétérogènes et critères de dominance," Économie et Prévision, Programme National Persée, vol. 138(2), pages 125-146.
    5. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, vol. 64(254), pages 233-244, May.
    6. Udo Ebert & Patrick Moyes, 2003. "Equivalence Scales Reconsidered," Econometrica, Econometric Society, vol. 71(1), pages 319-343, January.
    7. Stephen P. Jenkins & Peter J. Lambert, 1993. "Ranking Income Distributions When Needs Differ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 337-356, December.
    8. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, vol. 42(1), pages 67-80, September.
    9. Anthony B. Atkinson & François Bourguignon, 1987. "Income Distribution and Differences in Needs," Palgrave Macmillan Books, in: George R. Feiwel (ed.), Arrow and the Foundations of the Theory of Economic Policy, chapter 12, pages 350-370, Palgrave Macmillan.
    10. Anthony Shorrocks, 2004. "Inequality and welfare evaluation of heterogeneous income distributions," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(3), pages 193-218, July.
    11. Jenkins, Stephen P & Lambert, Peter J, 1993. "Ranking Income Distributions When Needs Differ," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 337-356, December.
    12. Anthony F. Shorrocks, 2004. "Inequality and Welfare Evaluation of Heterogeneous Income Distributions," WIDER Working Paper Series RP2004-01, World Institute for Development Economic Research (UNU-WIDER).
    13. Christine Chambaz & Eric Maurin, 1998. "Atkinson And Bourguignon'S Dominance Criteria: Extended And Applied To The Measurement Of Poverty In France," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(4), pages 497-513, December.
    14. Udo Ebert, 1999. "Using equivalent income of equivalent adults to rank income distributions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(2), pages 233-258.
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    Cited by:

    1. Marc Fleurbaey & Cyrille Hagneré & Alain Trannoy, 2007. "Welfare Comparisons of Income Distributions and Family Size," IDEP Working Papers 0702, Institut d'economie publique (IDEP), Marseille, France, revised 16 Jan 2007.
    2. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," LIDAM Discussion Papers CORE 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Claudio Zoli & Peter Lambert, 2012. "Sequential procedures for poverty gap dominance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(2), pages 649-673, July.
    4. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, vol. 69(1), pages 55-67, July.
    5. Udo Ebert, 2008. "Living Standard, Social Welfare, and the Redistribution of Income in a Heterogeneous Population," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 873-889, October.
    6. Fleurbaey, Marc & Hagneré, Cyrille & Trannoy, Alain, 2014. "Welfare comparisons of income distributions and family size: An individualistic approach," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 12-27.
    7. Udo Ebert, 2010. "Equity‐regarding poverty measures: differences in needs and the role of equivalence scales," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(1), pages 301-322, February.

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    More about this item

    Keywords

    sequential dominance; welfare; equivalence scales;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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