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Does less inequality among households mean less inequality among individuals?

  • Peluso, Eugenio
  • Trannoy, Alain

Consider an income distribution among households of the same size in which individuals, equally needy from the point of view of an ethical observer, are treated unfairly. Individuals are split into two types, the dominant and the dominated. We look for conditions under which welfare and inequality quasi-orders established at the household level still hold at the individual one. A necessary and sufficient condition for the Generalized Lorenz test is that the income of dominated individuals is a concave function of the household income: individuals of poor households have to stand more together than individuals of rich households. This property also proves to be crucial for the preservation of the Relative and Absolute Lorenz criteria, when the more egalitarian distribution is the poorest. Extensions to individuals heterogeneous in needs and more than two types are also provided.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 133 (2007)
Issue (Month): 1 (March)
Pages: 568-578

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Handle: RePEc:eee:jetheo:v:133:y:2007:i:1:p:568-578
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. Kanbur, Ravi & Haddad, Lawrence, 1994. "Are Better Off Households More Unequal or Less Unequal?," Oxford Economic Papers, Oxford University Press, vol. 46(3), pages 445-58, July.
  2. Sudhir Anand and Amartya Sen, 1995. "Gender Inequality in Human Development: Theories and Measurement," Human Development Occasional Papers (1992-2007) HDOCPA-1995-01, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  3. Yaari, Menahem E, 1977. "A Note on Separability and Quasiconcavity," Econometrica, Econometric Society, vol. 45(5), pages 1183-86, July.
  4. Moyes, Patrick, 1987. "A new concept of Lorenz domination," Economics Letters, Elsevier, vol. 23(2), pages 203-207.
  5. Haddad, Lawrence & Kanbur, Ravi, 1989. "How serious is the neglect of intrahousehold inequality ?," Policy Research Working Paper Series 296, The World Bank.
  6. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
  7. Udo Ebert, 1999. "Using equivalent income of equivalent adults to rank income distributions," Social Choice and Welfare, Springer, vol. 16(2), pages 233-258.
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