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Welfare Comparisons: Sequential Procedures for Heterogeneous Population

Author

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  • Peter Lambert
  • Xavi Ramos

Abstract

Some analysts use sequential dominance criteria, and others use equivalence scales in combination with non-sequential dominance tests, to make welfare comparisons of joint distributions of income and needs. In this paper we present a new sequential procedure which copes with situations in which sequential dominance fails. We also demonstrate that the recommendations deriving from the sequential approach are valid for distributions of equivalent income whatever equivalence scale the analyst might adopt. Thus the paper marries together the sequential and equivalizing approaches, seen as alternatives in much previous literature. All results are specified in forms which allow for demographic differences in the populations being compared.

Suggested Citation

  • Peter Lambert & Xavi Ramos, 2001. "Welfare Comparisons: Sequential Procedures for Heterogeneous Population," CESifo Working Paper Series 519, CESifo.
    • Handle: RePEc:ces:ceswps:_519
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    References listed on IDEAS

    as
    1. Ebert U., 1996. "Income inequality and differences in household size," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 57-58, February.
    2. Udo Ebert & Patrick Moyes, 2000. "Adjusting Incomes for Needs: Can One Avoid Equivalence Scales?," Econometric Society World Congress 2000 Contributed Papers 0917, Econometric Society.
    3. Ebert, Udo, 2000. "Sequential Generalized Lorenz Dominance and Transfer Principles," Bulletin of Economic Research, Wiley Blackwell, vol. 52(2), pages 113-122, April.
    4. Fleurbaey, Marc & Hagnere, Cyrille & Trannoy, Alain, 2003. "Welfare comparisons with bounded equivalence scales," Journal of Economic Theory, Elsevier, vol. 110(2), pages 309-336, June.
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