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On Comparing Heterogenous Populations: is there really a Conflict between the Pareto Criterion and Inequality Aversion?

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Listed:
  • Bart Chapeau
  • Erwin Ooghe

Abstract

The incompatibility between the Pareto indifference criterion and a concern for greater equality in living standards of heterogenous populations (see, amongst others, Ebert, 1995, 1997, Ebert and Moyes, 2003 and Shorrocks, 1995) might come as a surprise, since both principles are reconcilable when people differ only in income (homogenous population). We present two families of welfare rankings --(i) single parameter extensions of the generalized Lorenz dominance rule and (ii) a subset of Weymark's (1981) generalized Ginis-- and show how and why these rules resolve the paradox.

Suggested Citation

  • Bart Chapeau & Erwin Ooghe, 2004. "On Comparing Heterogenous Populations: is there really a Conflict between the Pareto Criterion and Inequality Aversion?," Working Papers Department of Economics ces0407, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces0407
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    Cited by:

    1. Bart CapƩau & Erwin Ooghe, 2004. "On the reconciliation of efficiency and inequality aversion with heterogeneous populations: characterization results," Public Economics Working Paper Series wpeiahp, Katholieke Universiteit Leuven, Centrum voor Economische Studiƫn, Working Group Public Economics.

    More about this item

    Keywords

    heterogeneity; welfare comparisons.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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