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Welfare comparisons: sequential procedures for heterogenous populations

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  • Peter J. Lambert
  • Xavier Ramos

    ()
    (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

Some analysts use sequential dominance criteria, and others use equivalence scales in combination with non-sequential dominance tests, to make welfare comparisons of joint distributions of income and needs. In this paper we present a new sequential procedure which copes with situations in which sequential dominance fails. We also demonstrate that the recommendations deriving from the sequential approach are valid for distributions of equivalent income whatever equivalence scale the analyst might adopt. Thus the paper marries together the sequential and equivalizing approaches, seen as alternatives in much previous literature. All results are specified in forms which allow for demographic differences in the populations being compared.

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File URL: http://www.ecap.uab.es/RePEc/doc/wp0114.pdf
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Bibliographic Info

Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wp0114.

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Length: 17 pages
Date of creation: Jun 2001
Date of revision:
Handle: RePEc:uab:wprdea:wp0114

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  1. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 44(2), pages 77-124, April.
  2. 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, International Association for Research in Income and Wealth, vol. 39(4), pages 337-56, December.
  3. Patrick MOYES (GREThA et IDEP Marseille), 2011. "Comparisons of Heterogeneous Distributions and Dominance Criteria," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2011-23, Groupe de Recherche en Economie Théorique et Appliquée.
  4. Fleurbaey, Marc & Hagnere, Cyrille & Trannoy, Alain, 2003. "Welfare comparisons with bounded equivalence scales," Journal of Economic Theory, Elsevier, Elsevier, vol. 110(2), pages 309-336, June.
  5. Ebert, Udo, 1995. "Income inequality and differences in household size," Mathematical Social Sciences, Elsevier, Elsevier, vol. 30(1), pages 37-55, August.
  6. Atkinson, A. B., 1990. "Public economics and the economic public," European Economic Review, Elsevier, Elsevier, vol. 34(2-3), pages 225-248, May.
  7. Ebert, Udo, 2000. "Sequential Generalized Lorenz Dominance and Transfer Principles," Bulletin of Economic Research, Wiley Blackwell, Wiley Blackwell, vol. 52(2), pages 113-22, April.
  8. Whitmore, G A, 1970. "Third-Degree Stochastic Dominance," American Economic Review, American Economic Association, American Economic Association, vol. 60(3), pages 457-59, June.
  9. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, Elsevier, vol. 12(3), pages 416-442, June.
  10. Chambaz, Christine & Maurin, Eric, 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, International Association for Research in Income and Wealth, vol. 44(4), pages 497-513, December.
  11. Banks, James & Johnson, Paul, 1994. "Equivalence Scale Relativities Revisited," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(425), pages 883-90, July.
  12. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  13. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, Elsevier, vol. 42(1), pages 67-80, September.
  14. Ok, Efe A. & Lambert, Peter J., 1999. "On evaluating social welfare by sequential generalized Lorenz dominance," Economics Letters, Elsevier, Elsevier, vol. 63(1), pages 45-53, April.
  15. Bishop, John A. & Formby, John P. & Thistle, Paul D., 1991. "Rank dominance and international comparisons of income distributions," European Economic Review, Elsevier, Elsevier, vol. 35(7), pages 1399-1409, October.
  16. Udo Ebert & Patrick Moyes, 2000. "Adjusting Incomes for Needs: Can One Avoid Equivalence Scales?," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 0917, Econometric Society.
  17. Ebert, Udo, 1997. "Social Welfare When Needs Differ: An Axiomatic Approach," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 64(254), pages 233-44, May.
  18. Fisher, Franklin M, 1987. "Household Equivalence Scales and Interpersonal Comparisons," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 54(3), pages 519-24, July.
  19. Udo Ebert, 1999. "Using equivalent income of equivalent adults to rank income distributions," Social Choice and Welfare, Springer, Springer, vol. 16(2), pages 233-258.
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Citations

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Cited by:
  1. Claudio Zoli & Peter J. Lambert, 2005. "Sequential procedures for poverty gap dominance," University of Oregon Economics Department Working Papers, University of Oregon Economics Department 2005-1, University of Oregon Economics Department, revised 01 Jan 2005.
  2. Erwin Ooghe & Peter J. Lambert, 2005. "On Bounded Dominance Criteria," University of Oregon Economics Department Working Papers, University of Oregon Economics Department 2005-6, University of Oregon Economics Department, revised 01 May 2005.
  3. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, Springer, vol. 69(1), pages 55-67, July.
  4. Savaglio, Ernesto, 2011. "On multidimensional inequality with variable distribution mean," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 453-461.
  5. Patrick MOYES (GREThA et IDEP Marseille), 2011. "Comparisons of Heterogeneous Distributions and Dominance Criteria," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2011-23, Groupe de Recherche en Economie Théorique et Appliquée.
  6. Ooghe, Erwin, 2007. "Sequential dominance and weighted utilitarianism," Economics Letters, Elsevier, Elsevier, vol. 94(2), pages 208-212, February.
  7. Magne Mogstad, 2007. "Measuring Income Inequality under Restricted Interpersonal Comparability," Discussion Papers, Research Department of Statistics Norway 498, Research Department of Statistics Norway.

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