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Measuring opportunity inequality with monetary transfers

  • Laurence Kranich

    ()

In this paper I consider the problem of measuring opportunity inequality when monetary transfers are possible. First, I consider the case in which agents have homogeneous preferences, as in the previous literature, and I then propose an extension to the heterogeneous case. In both, I identify an appropriate egalitarian benchmark relative to which inequality can be measured, and I establish that this yields a theory of measurement analogous to that of income inequality. This overcomes a difficulty recently reported Ok (1997). Finally, I discuss the benchmark notion of equal shadow wealth as a new concept of fairness. The results of the paper are immediately applicable to the measurement of multidimensional economic inequality including economies with indivisible goods.

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File URL: http://hdl.handle.net/10.1007/s10888-008-9087-y
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Article provided by Springer in its journal The Journal of Economic Inequality.

Volume (Year): 7 (2009)
Issue (Month): 4 (December)
Pages: 371-385

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Handle: RePEc:kap:jecinq:v:7:y:2009:i:4:p:371-385
Contact details of provider: Web page: http://springerlink.metapress.com/link.asp?id=111137

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  1. Kranich, L., 1993. "Equitable Opportunities: An Axiomatic Approach," Papers 3-93-1, Pennsylvania State - Department of Economics.
  2. Diamantaras, Dimitrios & Thomson, William, 1990. "A refinement and extension of the no-envy concept," Economics Letters, Elsevier, vol. 33(3), pages 217-222, July.
  3. John Weymark, 2003. "Generalized Gini Indices of Equality of Opportunity," Journal of Economic Inequality, Springer, vol. 1(1), pages 5-24, April.
  4. Fleurbaey Marc, 1995. "Three Solutions for the Compensation Problem," Journal of Economic Theory, Elsevier, vol. 65(2), pages 505-521, April.
  5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  6. Peragine, Vitorocco, 1999. " The Distribution and Redistribution of Opportunity," Journal of Economic Surveys, Wiley Blackwell, vol. 13(1), pages 37-69, February.
  7. Fields, Gary S & Fei, John C H, 1978. "On Inequality Comparisons," Econometrica, Econometric Society, vol. 46(2), pages 303-16, March.
  8. William Thomson, 2007. "Fair Allocation Rules," RCER Working Papers 539, University of Rochester - Center for Economic Research (RCER).
  9. FLEURBAEY, Marc & MANIQUET, François, . "Compensation and responsibility," CORE Discussion Papers RP 2284, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Vitorocco Peragine, . "Measuring and Implementing Equality of Opportunity for Income," Discussion Papers 98/11, Department of Economics, University of York.
  11. Jorge Nieto & IÓigo Iturbe-Ormaetxe, 1995. "On fair allocations and monetary compensations," Economic Theory, Society for the Advancement of Economic Theory (SAET), vol. 7(1), pages 125-138.
  12. Kristof Bismans & Luc Lauwers & Erwin Ooghe, 2006. "A consistent multidimensional Pigou-Dalton transfer principle," Working Papers Department of Economics ces0620, KU Leuven, Faculty of Economics and Business, Department of Economics.
  13. Herrero, Carmen, 1997. "Equitable opportunities: an extension," Economics Letters, Elsevier, vol. 55(1), pages 91-95, August.
  14. Laurence Kranich, 1996. "Equitable opportunities in economic environments," Social Choice and Welfare, The Society for Social Choice and Welfare, vol. 14(1), pages 57-64.
  15. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April.
  16. Herrero, Carmen & Iturbe-Ormaetxe, Inigo & Nieto, Jorge, 1998. "Ranking opportunity profiles on the basis of the common opportunities," Mathematical Social Sciences, Elsevier, vol. 35(3), pages 273-289, May.
  17. Efe A. Ok & Laurence Kranich, 1998. "The measurement of opportunity inequality: a cardinality-based approach," Social Choice and Welfare, The Society for Social Choice and Welfare, vol. 15(2), pages 263-287.
  18. Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers 391, California Davis - Institute of Governmental Affairs.
  19. Ok, Efe A., 1997. "On Opportunity Inequality Measurement," Journal of Economic Theory, Elsevier, vol. 77(2), pages 300-329, December.
  20. Savaglio, Ernesto & Vannucci, Stefano, 2007. "Filtral preorders and opportunity inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 474-492, January.
  21. Thomson, William, 1982. "An informationally efficient equity criterion," Journal of Public Economics, Elsevier, vol. 18(2), pages 243-263, July.
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