IDEAS home Printed from https://ideas.repec.org/p/fip/fednsr/101431.html
   My bibliography  Save this paper

A Practitioner’s Note on the Shapley-Owen-Shorrocks Decomposition

Author

Abstract

Decomposing empirical or economic phenomena into the contributions of different inputs is a frequent goal of economic analysis. However, in many settings, the quantity of interest depends on many inputs which are aggregated non-linearly. In these settings, decompositions need not sum to one and often depend on the order in which inputs are “zeroed out.” In this note we describe a simple but convenient alternative. We show that using the Shapley-Owen value, extended to inequality decompositions in Shorrocks (1999, 2013), provides an additive decomposition that sums to one and is easily interpretable in terms of the contribution of different inputs (or groups of them) to some aggregate outcome. We provide several examples to help implement the approach. We believe this is exceptionally well-suited to decompositions in rich-structural models of economic phenomena which are typically non-linear.

Suggested Citation

  • Richard Audoly & Rory McGee & Sergio Ocampo & Gonzalo Paz-Pardo, 2025. "A Practitioner’s Note on the Shapley-Owen-Shorrocks Decomposition," Staff Reports 1163, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednsr:101431
    DOI: 10.59576/sr.1163
    as

    Download full text from publisher

    File URL: https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1163.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://www.newyorkfed.org/research/staff_reports/sr1163.html
    File Function: Summary
    Download Restriction: no
    File URL: https://libkey.io/10.59576/sr.1163?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednsr:101431. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.