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Inequality with Ordinal Data

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  • Frank A. Cowell
  • Emmanuel Flachaire

Abstract

The standard theory of inequality measurement assumes that the equalisand is a cardinal quantity, with known cardinalization. However, one often needs to make inequality comparisons where either the cardinalization is unknown or the underlying data are categorical. We propose an alternative approach to inequality analysis that is rigorous, has a natural interpretation, and embeds both the ordinal data problem and the well-known cardinal data problem. We show how the approach can be applied to the inequality of happiness and of health status.
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Suggested Citation

  • Frank A. Cowell & Emmanuel Flachaire, 2017. "Inequality with Ordinal Data," Economica, London School of Economics and Political Science, vol. 84(334), pages 290-321, April.
    • Handle: RePEc:bla:econom:v:84:y:2017:i:334:p:290-321
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