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Does The Specification of A New Class of Poverty Measures Matter? Evidence from Tunisia

Listed author(s):
  • Sami Bibi

The evaluation of the horizontal inefficiency of an anti-poverty design is often reduced to the determination of the type I errors, which occur where eligible individuals are not awarded benefits. Because under-coverage ratio does not consider the social cost resulting from unequal treatment of like individuals, it is irrelevant in assessing the severity and the depth of horizontal inefficiency. Also, when the cost of inequality approach is adopted to derive from a poverty measure, respecting the transfer axiom, a cost of inequality that is decomposable into two components, corresponding to vertical and horizontal inequality respectively, it is no longer possible to have different aversions toward these two forms of inequality. We follow then the cost of inequality approach after specifying a new class of poverty measures, which are parameterized by two coefficients allowing so different preferences toward these two equality principles. When these two coefficients are identical, the new poverty measures class reduces to the Foster, Greer and Thorbecke?s (1984) class, whose poverty measures imply the same aversion to vertical inequality and horizontal inequity. Further, for a given poverty line, the new class enables to characterize the set of poverty measures in which policymakers are indifferent between the post-reform poverty alleviation program and the status quo.

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Paper provided by Economic Research Forum in its series Working Papers with number 0327.

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Length: 14 pages
Date of creation: 09 2003
Date of revision: 09 2003
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:0327
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  1. Brennan, Geoffrey, 1971. "Horizontal Equity: An Extension of an Extension," Public Finance = Finances publiques, , vol. 26(3), pages 437-456.
  2. Duclos, Jean-Yves, 1995. "On Equity Aspects of Imperfect Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(2), pages 177-190, June.
  3. King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January.
  4. Jean-Yves Duclos & Peter J. Lambert, 2000. "A normative and statistical approach to measuring classical horizontal inequity," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 87-113, February.
  5. Kaplow, Louis, 1989. "Horizontal Equity: Measures in Search of a Principle," National Tax Journal, National Tax Association, vol. 42(2), pages 139-54, June.
  6. Kaplow, Louis, 1989. "Horizontal Equity: Measures in Search of a Principle," National Tax Journal, National Tax Association, vol. 42(2), pages 139-154, June.
  7. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
  8. Marcus C. Berliant & Robert P. Strauss, 1985. "The Horizontal and Vertical Equity Characteristics of the Federal Individual Income Tax, 1966-1977," NBER Chapters,in: Horizontal Equity, Uncertainty, and Economic Well-Being, pages 179-214 National Bureau of Economic Research, Inc.
  9. Feldstein, Martin, 1976. "On the theory of tax reform," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 77-104.
  10. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  11. Aronson, J Richard & Johnson, Paul & Lambert, Peter J, 1994. "Redistributive Effects and Unequal Income Tax Treatment," Economic Journal, Royal Economic Society, vol. 104(423), pages 262-270, March.
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