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The mass transfer approach to multivariate discrete first order stochastic dominance: Direct proof and implications

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  • Østerdal, Lars Peter

Abstract

Abstract A fundamental result in the theory of stochastic dominance tells that first order dominance between two finite multivariate distributions is equivalent to the property that the one can be obtained from the other by shifting probability mass from one outcome to another that is worse a finite number of times. This paper provides a new and elementary proof of that result by showing that starting with an arbitrary system of mass transfers, whenever the resulting distribution is first order dominated one can gradually rearrange transfers, according to a certain decentralized procedure, and obtain a system of transfers all shifting mass to outcomes that are worse.

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  • Østerdal, Lars Peter, 2010. "The mass transfer approach to multivariate discrete first order stochastic dominance: Direct proof and implications," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1222-1228, November.
    • Handle: RePEc:eee:mateco:v:46:y:2010:i:6:p:1222-1228
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    Cited by:

    1. M. Azhar Hussain, 2016. "EU Country Rankings’ Sensitivity to the Choice of Welfare Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 1-17, January.
    2. Arndt, Channing & Distante, Roberta & Hussain, M. Azhar & Østerdal, Lars Peter & Huong, Pham Lan & Ibraimo, Maimuna, 2012. "Ordinal Welfare Comparisons with Multiple Discrete Indicators: A First Order Dominance Approach and Application to Child Poverty," World Development, Elsevier, vol. 40(11), pages 2290-2301.
    3. Malokele Nanivazo, 2015. "First Order Dominance Analysis: Child Wellbeing in the Democratic Republic of Congo," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(1), pages 235-255, May.
    4. Channing Arndt & Azhar M. Hussain & Vincenzo Salvucci & Finn Tarp & Lars Peter Østerdal, 2016. "Poverty Mapping Based on First‐Order Dominance with an Example from Mozambique," Journal of International Development, John Wiley & Sons, Ltd., vol. 28(1), pages 3-21, January.
    5. Nanivazo, Malokele, 2014. "First order dominance analysis: Child wellbeing in the Democratic Republic of Congo," WIDER Working Paper Series 025, World Institute for Development Economic Research (UNU-WIDER).
    6. Christoffer Sonne-Schmidt & Finn Tarp & Lars Peter Østerdal, 2016. "Ordinal Bivariate Inequality: Concepts and Application to Child Deprivation in Mozambique," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 559-573, September.
    7. M. Azhar Hussain & Mette Møller Jørgensen & Lars Peter Østerdal, 2016. "Refining Population Health Comparisons: A Multidimensional First Order Dominance Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(2), pages 739-759, November.
    8. Frank A Cowell & Martyna Kobus & Radoslaw Kurek, 2017. "Welfare and Inequality Comparisons for Uni- and Multi-dimensional Distributions of Ordinal Data," STICERD - Public Economics Programme Discussion Papers 31, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    9. Sonne-Schmidt, Christoffer & Tarp, Finn & Peter, Lars, 2011. "Ordinal multidimensional inequality: theory and application to the 2x2 case," MPRA Paper 72838, University Library of Munich, Germany.
    10. Arndt, Channing & Salvucci, Vincenzo & Tarp, Finn & Østerdal, Lars Peter & Hussain, M. Azhar, 2013. "Advancing Small Area Estimation," WIDER Working Paper Series 053, World Institute for Development Economic Research (UNU-WIDER).
    11. Channing Arndt & Nikolaj Siersbæk, & Lars Peter Østerdal, 2015. "Multidimensional first-order dominance comparisons of population wellbeing," WIDER Working Paper Series 122, World Institute for Development Economic Research (UNU-WIDER).

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