A note on the 'Natural Rate of Subjective Inequality' hypothesis and the approximate relationship between the Gini coefficient and the Atkinson index
AbstractIn a recent paper in this journal, Lambert et al (2003) sought to establish the Natural Rate of Subjective Inequality (NRSI) hypothesis. In this note, their test of the NRSI hypothesis is critically evaluated and an alternative reason is offered as to why their empirics appeared to support it. The findings, based on simulation, do not overturn the NRSI hypothesis, but indicate the need for deeper and more thorough analysis if this insightful and potentially far-reaching hypothesis is to be established.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 03/12.
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Natural rate of subjective inequality; inequality indices; simulation;
Find related papers by JEL classification:
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- D30 - Microeconomics - - Distribution - - - General
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-10-28 (All new papers)
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- Valentino Dardanoni & Peter Lambert, 1998.
"Horizontal inequity comparisons,"
IFS Working Papers
W98/07, Institute for Fiscal Studies.
- Wilfling, Bernd & Kramer, Walter, 1993. "The Lorenz-ordering of Singh-Maddala income distributions," Economics Letters, Elsevier, vol. 43(1), pages 53-57.
- Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
- Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
- McDonald, James B, 1984. "Some Generalized Functions for the Size Distribution of Income," Econometrica, Econometric Society, vol. 52(3), pages 647-63, May.
- Lambert, Peter J. & Millimet, Daniel L. & Slottje, Daniel, 2003. "Inequality aversion and the natural rate of subjective inequality," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1061-1090, May.
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