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A consistent multidimensional Pigou-Dalton transfer principle

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  • Kristof Bismans
  • Luc Lauwers
  • Erwin Ooghe

Abstract

The Pigou-Dalton principle demands that a regressive transfer decreases social welfare. In the unidimensional setting this principle is consistent, because regressivity in terms of attribute amounts and regressivity in terms of individual well-being coincide in the case of a single attribute. In the multidimensional setting, however, the relationship between the various attributes and well-being is complex. To formulate a multidimensional Pigou-Dalton transfer principle, a concept of wellbeing must therefore first be defined. We propose a version of the Pigou-Dalton principle that defines regressivity in terms of the individual well-being ranking that underlies the social ranking on which the principle is imposed. This well-being ranking (of attribute bundles) is induced from the social ranking over distributions in which all individuals have the same attribute bundle. It is shown that this new principle—the consistent Pigou-Dalton principle—imposes a quasi-linear structure on the well-being ranking. We discuss the implications of this result within the literature on multidimensional inequality measurement and within the literature on needs.

Suggested Citation

  • 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.
  • Handle: RePEc:ete:ceswps:ces0620
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    References listed on IDEAS

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    5. Anthony Shorrocks, 2004. "Inequality and welfare evaluation of heterogeneous income distributions," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(3), pages 193-218, July.
    6. Charles Blackorby & David Donaldson & Maria Auersperg, 1981. "A New Procedure for the Measurement of Inequality within and among Population Subgroups," Canadian Journal of Economics, Canadian Economics Association, vol. 14(4), pages 665-685, November.
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    9. Capeau, Bart & Ooghe, Erwin, 2007. "On comparing heterogeneous populations: Is there really a conflict between welfarism and a concern for greater equality in living standards?," Mathematical Social Sciences, Elsevier, vol. 53(1), pages 1-28, January.
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    Cited by:

    1. Croci Angelini, Elisabetta & Michelangeli, Alessandra, 2012. "Axiomatic measurement of multidimensional well-being inequality: Some distributional questions," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 548-557.
    2. Marcello Basili & Paulo Casaca & Alain Chateauneuf & Maurizio Franzini, 2017. "Multidimensional Pigou–Dalton transfers and social evaluation functions," Theory and Decision, Springer, vol. 83(4), pages 573-590, December.
    3. Rolf Aaberge & Andrea Brandolini, 2014. "Multidimensional poverty and inequality," Discussion Papers 792, Statistics Norway, Research Department.
    4. Claudio Zoli & Peter Lambert, 2012. "Sequential procedures for poverty gap dominance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 39(2), pages 649-673, July.
    5. Laurence Kranich, 2009. "Measuring opportunity inequality with monetary transfers," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(4), pages 371-385, December.
    6. Bosmans, Kristof & Decancq, Koen & Ooghe, Erwin, 2015. "What do normative indices of multidimensional inequality really measure?," Journal of Public Economics, Elsevier, vol. 130(C), pages 94-104.

    More about this item

    Keywords

    Pigou-Dalton principle; Multidimensional inequality measurement; Majorization; Budget dominance; Needs; Weak equity axiom;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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