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Multidimensional inequality comparisons: A compensation perspective

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  • Muller, Christophe
  • Trannoy, Alain

Abstract

We provide a unified treatment of the two approaches pioneered by Atkinson and Bourguignon (1982, 1987) [3,4] by resorting to compensation principles in the bivariate case. We treat the attributes of individual utility asymmetrically by assuming that one attribute can be used to compensate another. Our main result consists of two sufficient second-order stochastic dominance conditions. In the case where the compensated variable has a discrete distribution, the distribution of the compensating variable must satisfy a condition which degenerates to the Sequential Generalized Lorenz test for identical marginal distributions of the compensated variable. Furthermore, the distributions of the compensated variable must satisfy the Generalized Lorenz test.

Suggested Citation

  • Muller, Christophe & Trannoy, Alain, 2012. "Multidimensional inequality comparisons: A compensation perspective," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1427-1449.
  • Handle: RePEc:eee:jetheo:v:147:y:2012:i:4:p:1427-1449
    DOI: 10.1016/j.jet.2011.09.002
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Patrick MOYES, 2013. "Rearrangements and Sequential Rank Order Dominance," Cahiers du GREThA 2013-10, Groupe de Recherche en Economie Théorique et Appliquée.
    2. Nicoleta Anca Matei & Claudio Zoli, 2012. "Restricted Finite Time Dominance," Working Papers 30/2012, University of Verona, Department of Economics.
    3. Christoph Heinzel, 2014. "Term structure of discount rates under multivariate s-ordered consumption growth," Working Papers SMART - LERECO 14-01, INRA UMR SMART-LERECO.
    4. Gajdos, Thibault & Weymark, John A., 2012. "Introduction to inequality and risk," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1313-1330.
    5. Christophe Muller & Asha Kannan & Roland Alcindor, 2016. "Multidimensional Poverty in Seychelles," AMSE Working Papers 1601, Aix-Marseille School of Economics, Marseille, France, revised Jan 2016.
    6. Christophe Muller & Alain Trannoy, 2003. "A Dominance Approach to Well-Being Inequality across Countries," IDEP Working Papers 0313, Institut d'economie publique (IDEP), Marseille, France.
    7. FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011. "Equity in health and health care," CORE Discussion Papers 2011026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. Therese Nilsson, 2010. "Health, Wealth and Wisdom: Exploring Multidimensional Inequality in a Developing Country," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 95(2), pages 299-323, January.
    9. Nicholas Rohde & Ross Guest, 2013. "Multidimensional Racial Inequality in the United States," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(2), pages 591-605, November.
    10. Moyes, Patrick, 2013. "Rearrangements and sequential rank order dominance," Journal of Mathematical Economics, Elsevier, vol. 49(4), pages 278-290.

    More about this item

    Keywords

    Multidimensional welfare; Compensation; Dominance; Lorenz criterion;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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