IDEAS home Printed from https://ideas.repec.org/p/grt/wpegrt/2016-27.html
   My bibliography  Save this paper

Inequality of Living Standards and Isoelastic Equivalence Scales

Author

Listed:
  • Udo EBERT
  • Patrick MOYES

Abstract

Comparisons of well-being across heterogenous households necessitate that households\' incomes are adjusted for differences in size and composition: equivalence scales arecommonly used to achieve this objective.Equivalence scales with constant elasticity with respect to family size have been argued to provide a good approximation to a large variety of scales (see, e.g., B. Buhmann, L. Rainwater, G. Schmaus, and T.M. Smeeding, Review of Income and Wealth (1988), 115--142) and they therefore play a prominent role in empirical work. Focusing on inequality of well-being, we first show that, if one requires that the index of inequality is -- in addition to standard properties – invariant to modifications of the relative (marginal) distributions of needs and income across households, then the equivalence scales must be isoelastic. In addition, if all households\' members have the same preferences and if households maximise the sum of their members\' utilities, then the only preferences consistent with isoelastic scales are of the Cobb-Douglas type.

Suggested Citation

  • Udo EBERT & Patrick MOYES, 2016. "Inequality of Living Standards and Isoelastic Equivalence Scales," Cahiers du GREThA (2007-2019) 2016-27, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
  • Handle: RePEc:grt:wpegrt:2016-27
    as

    Download full text from publisher

    File URL: http://cahiersdugretha.u-bordeaux.fr/2016/2016-27.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ebert, Udo, 2000. "Sequential Generalized Lorenz Dominance and Transfer Principles," Bulletin of Economic Research, Wiley Blackwell, vol. 52(2), pages 113-122, April.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Udo Ebert & Patrick Moyes, 2009. "Household decisions and equivalence scales," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 1039-1062, October.
    4. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Differences in Needs and Assessment of Income Distributions," Bulletin of Economic Research, Wiley Blackwell, vol. 44(2), pages 77-124, April.
    5. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521716284.
    6. Udo Ebert & Patrick Moyes, 2003. "Equivalence Scales Reconsidered," Econometrica, Econometric Society, vol. 71(1), pages 319-343, January.
    7. Bourguignon, Francois, 1989. "Family size and social utility : Income distribution dominance criteria," Journal of Econometrics, Elsevier, vol. 42(1), pages 67-80, September.
    8. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, vol. 69(1), pages 55-67, July.
    9. Stephen Bazen & Patrick Moyes, 2003. "International comparisons of income distributions when population structures differ," Post-Print hal-00156458, HAL.
    10. Ebert U., 1996. "Income inequality and differences in household size," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 57-58, February.
    11. A. B. Atkinson & F. Bourguignon, 1982. "The Comparison of Multi-Dimensioned Distributions of Economic Status," Review of Economic Studies, Oxford University Press, vol. 49(2), pages 183-201.
    12. C. Seidl & Patrick Moyes & A. F. Shorrocks, 2002. "Inequalities: Theory, experiments and applications," Post-Print hal-00157353, HAL.
    13. Edwards, John H. Y., 1990. "Congestion function specification and the "publicness" of local public goods," Journal of Urban Economics, Elsevier, vol. 27(1), pages 80-96, January.
    14. Donaldson, David & Pendakur, Krishna, 2004. "Equivalent-expenditure functions and expenditure-dependent equivalence scales," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 175-208, January.
    15. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Udo Ebert & Patrick Moyes, 2017. "Inequality and isoelastic equivalence scales: restrictions and implications," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(2), pages 295-326, February.
    2. repec:zbw:hohpro:333 is not listed on IDEAS
    3. repec:old:wpaper:333 is not listed on IDEAS
    4. Udo Ebert & Patrick Moyes, 2011. "Inequality of Well-Being and Isoelastic Equivalence Scales," Working Papers V-333-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    5. repec:zbw:hohpro:331 is not listed on IDEAS
    6. Udo Ebert, 2011. "The redistribution of income when needs differ," Working Papers V-331-11, University of Oldenburg, Department of Economics, revised Feb 2011.
    7. repec:old:wpaper:331 is not listed on IDEAS
    8. Nicolas Gravel & Patrick Moyes, 2011. "Bidimensional Inequalities with an Ordinal Variable," Studies in Choice and Welfare, in: Marc Fleurbaey & Maurice Salles & John A. Weymark (ed.), Social Ethics and Normative Economics, pages 101-127, Springer.
    9. Moyes, Patrick, 2012. "Comparisons of heterogeneous distributions and dominance criteria," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1351-1383.
    10. Udo Ebert & Patrick Moyes, 2009. "Household decisions and equivalence scales," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 1039-1062, October.
    11. Udo Ebert, 2010. "Dominance criteria for welfare comparisons: using equivalent income to describe differences in needs," Theory and Decision, Springer, vol. 69(1), pages 55-67, July.
    12. Satya R. Chakravarty & Pietro Muliere, 2003. "Welfare indicators: A review and new perspectives. 1. Measurement of inequality," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 457-497.
    13. Gravel, Nicolas & Moyes, Patrick, 2012. "Ethically robust comparisons of bidimensional distributions with an ordinal attribute," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1384-1426.
    14. Udo Ebert, 2007. "Ethical inequality measures and the redistribution of income when needs differ," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(3), pages 263-278, December.
    15. Peter J. Lambert & Xavier Ramos, 2001. "Welfare comparisons: sequential procedures for heterogenous population," Working Papers wp0114, Department of Applied Economics at Universitat Autonoma of Barcelona.
    16. Patrick Moyes & Stephen Bazen, 2003. "International Comparisons of Income Distribution," LIS Working papers 341, LIS Cross-National Data Center in Luxembourg.
    17. Udo Ebert, 2000. "Equivalizing Incomes: A Normative Approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 619-640, December.
    18. Banerjee, Asis Kumar, 2010. "A multidimensional Gini index," Mathematical Social Sciences, Elsevier, vol. 60(2), pages 87-93, September.
    19. Paul Makdissi & Quentin Wodon, 2004. "Migration, poverty, and housing in Honduras," Estudios de Economia, University of Chile, Department of Economics, vol. 31(1 Year 20), pages 5-20, June.
    20. Jean‐Yves Duclos & Magda Mercader‐Prats, 1999. "Household Needs And Poverty: With Application To Spain And The U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 77-98, March.
    21. Moyes, Patrick & Shorrocks, Anthony, 1998. "The impossibility of a progressive tax structure," Journal of Public Economics, Elsevier, vol. 69(1), pages 49-65, July.
    22. 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.
    23. Ooghe, Erwin, 2007. "Sequential dominance and weighted utilitarianism," Economics Letters, Elsevier, vol. 94(2), pages 208-212, February.
    24. 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.

    More about this item

    Keywords

    Inequality of well-being; Household size; Equivalence scales; Constant elasticity; Cobb-Douglas preferences.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:grt:wpegrt:2016-27. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ernest Miguelez). General contact details of provider: https://edirc.repec.org/data/ifredfr.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.