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Unit-Consistent Decomposable Inequality Measures

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  • BUHONG ZHENG

Abstract

This paper introduces a new axiom-the unit consistency axiom-into inequality measurement. This new axiom requires the ordinal inequality rankings (rather than the cardinal indices) to be unaffected when incomes are expressed in different units. I argue that unit consistency is an indispensable axiom for the measurement of income inequality. When unit consistency is combined with decomposability, I show that the unit-consistent decomposable class of inequality measures is a two-parameter extension of the one-parameter generalized entropy class. The extended class accommodates a variety of value judgments and includes different types of inequality measures. Copyright (c) The London School of Economics and Political Science 2006.

Suggested Citation

  • Buhong Zheng, 2007. "Unit-Consistent Decomposable Inequality Measures," Economica, London School of Economics and Political Science, vol. 74(293), pages 97-111, February.
  • Handle: RePEc:bla:econom:v:74:y:2007:i:293:p:97-111
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    Cited by:

    1. Indraneel Dasgupta, & Ravi Kanbur, "undated". "Should Egalitarians Expropriate Philanthropists?," Discussion Papers 07/13, University of Nottingham, CREDIT.
    2. Subramanian Sreenivasan & Jayaraj Dhairiyarayar, 2013. "The Evolution of Consumption and Wealth Inequality in India: A Quantitative Assessment," Journal of Globalization and Development, De Gruyter, vol. 4(2), pages 253-281, November.
    3. Paul Allanson & Dennis Petrie, 2014. "Understanding The Vertical Equity Judgements Underpinning Health Inequality Measures," Health Economics, John Wiley & Sons, Ltd., vol. 23(11), pages 1390-1396, November.
    4. M. Lasso de la Vega & Ana Urrutia, 2011. "Characterizing how to aggregate the individuals’ deprivations in a multidimensional framework," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(2), pages 183-194, June.
    5. M-super-a Casilda Lasso de la Vega & Ana Urrutia & Henar Díez, 2010. "Unit Consistency And Bipolarization Of Income Distributions," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 65-83, March.
    6. Indraneel Dasgupta & Ravi Kanbur, 2011. "Does philanthropy reduce inequality?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 9(1), pages 1-21, March.
    7. Coral del Río & Olga Alonso-Villar, 2007. "Rankings of Income Distributions: A Note on Intermediate Inequality Indices," Working Papers 68, ECINEQ, Society for the Study of Economic Inequality.
    8. Beckman, Steve & James Smith, W. & Zheng, Buhong, 2009. "Measuring inequality with interval data," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 25-34, July.
    9. Satya Chakravarty & Swami Tyagarupananda, 2009. "The subgroup decomposable intermediate indices of inequality," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(2), pages 83-97, June.
    10. Buhong Zheng, 2007. "Inequality orderings and unit consistency," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(3), pages 515-538, October.
    11. Lasso de la Vega, Casilda & Aristondo, Oihana, 2012. "Proposing indicators to measure achievement and shortfall inequality consistently," Journal of Health Economics, Elsevier, vol. 31(4), pages 578-583.
    12. Kristof Bosmans, 2016. "Consistent Comparisons of Attainment and Shortfall Inequality: A Critical Examination," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1425-1432, November.
    13. Florent Bresson & Kelly Labar, 2007. "“Leftist”, “Rightist” and Intermediate Decompositions of Poverty: Variations with an Application to China from 1990 to 2003," Working Papers 76, ECINEQ, Society for the Study of Economic Inequality.
    14. de la Vega, Casilda Lasso & Seidl, Christian, 2007. "The Impossibility of a Just Pigouvian," Economics Working Papers 2007-10, Christian-Albrechts-University of Kiel, Department of Economics.
    15. Lambert, Peter & Zheng, Buhong, 2011. "On the consistent measurement of attainment and shortfall inequality," Journal of Health Economics, Elsevier, vol. 30(1), pages 214-219, January.
    16. Jayaraj D. & Subramanian Sreenivasan, 2015. "Growth and Inequality in the Distribution of India.s Consumption Expenditure: 1983 to 2009-10," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    17. Mª Casilda Lasso de la Vega & Ana Urrutia & Henar Diez, 2009. "The Bourguignon and Chakravarty multidimensional poverty family: A characterization," Working Papers 109, ECINEQ, Society for the Study of Economic Inequality.
    18. Kjellsson, Gustav & Gerdtham, Ulf-G., 2013. "Lost in Translation: Rethinking the Inequality-Equivalence Criteria for Bounded Health Variables," Working Papers 2013:18, Lund University, Department of Economics, revised 02 Jan 2014.
    19. repec:bla:revinw:v:63:y:2017:i:4:p:661-684 is not listed on IDEAS
    20. repec:bla:revinw:v:62:y:2016:i:4:p:758-774 is not listed on IDEAS
    21. Subbu Subramanian, 2014. "Dividing a cake (or) Distributional values in the measurement of economic inequality: an expository note," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 7(2), May.
    22. Francisco Azpitarte & Olga Alonso-Villar, 2012. "A Dominance Criterion for Measuring Income Inequality from a Centrist View: The Case of Australia," Melbourne Institute Working Paper Series wp2012n03, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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