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A Bounded Index Test To Make Robust Heterogeneous Welfare Comparisons

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  • André Decoster
  • Erwin Ooghe

Abstract

Fleurbaey et al. (2003) develop a bounded dominance test to make robust welfare comparisons, which is intermediate between Ebert's (1999) cardinal dominance criterion-generalized Lorenz dominance applied to household incomes, divided and weighted by an equivalence scale-and Bourguignon's (1989) ordinal dominance criterion. In this paper, we develop a more complete, but less robust bounded index test, which is intermediate between Ebert's (1997) cardinal index test-an index applied to household incomes, divided and weighted by the equivalence scale-and a (new) sequential index test-an index applied to household incomes of the most needy only, the most and second most needy only, and so on. We illustrate the power of our test to detect welfare changes in Russia using data of the RLMS-surveys. Copyright © 2006 The Authors; Journal compilation © International Association for Research in Income and Wealth 2006.

Suggested Citation

  • André Decoster & Erwin Ooghe, 2006. "A Bounded Index Test To Make Robust Heterogeneous Welfare Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(3), pages 361-376, September.
  • Handle: RePEc:bla:revinw:v:52:y:2006:i:3:p:361-376
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    Cited by:

    1. Rolf Aaberge & Andrea Brandolini, 2014. "Multidimensional poverty and inequality," Discussion Papers 792, Statistics Norway, Research Department.

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