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A general class of additively decomposable inequality measures

Author

Listed:
  • James E. Foster

    () (Department of Economics, Vanderbilt University, Nashville, TN 37235, USA)

  • Artyom A. Shneyerov

    () (Department of Managerial Economics and Decision Sciences, J.L. Kellogg Graduate School of Management, Northwestern University, Evanston, IL 60208, USA)

Abstract

This paper presents and characterizes a two-parameter class of inequality measures that contains the generalized entropy measures, the variance of logarithms, the path independent measures of Foster and Shneyerov (1999) and several new classes of measures. The key axiom is a generalized form of additive decomposability which defines the within-group and between-group inequality terms using a generalized mean in place of the arithmetic mean. Our characterization result is proved without invoking any regularity assumption (such as continuity) on the functional form of the inequality measure; instead, it relies on a minimal form of the transfer principle - or consistency with the Lorenz criterion - over two-person distributions.

Suggested Citation

  • James E. Foster & Artyom A. Shneyerov, 1999. "A general class of additively decomposable inequality measures," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 14(1), pages 89-111.
  • Handle: RePEc:spr:joecth:v:14:y:1999:i:1:p:89-111
    Note: Received: October 27, 1997; revised: March 25, 1998
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    More about this item

    Keywords

    Inequality measures; Theil measures; Variance of logarithms; Generalized entropy measures; Additive decomposability; Functional equations; Axiomatic characterization.;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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