IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01802703.html

Income inequality measurement: a fresh look at two old issues

Author

Listed:
  • Brice Magdalou

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

The literature on income inequality measurement is split into (1) the ethical approach, from which the Atkinson–Kolm–Sen and Kolm–Pollak classes of indices are derived, and (2) the axiomatic approach, which mainly leads to the generalised entropies. This paper shows how to rationalise, under utilitarianism, the generalised entropies as ethical indices. In this framework a generalised entropy index is consistent with the principle of transfers if and only if the underlying utility function is increasing. This unconventional interpretation explains the strange behaviour of the generalised entropies for some values of the inequality aversion parameter, as identified by Shorrocks (Econometrica 48:613–625, 1980). In that case, the underlying utility function is convex. Then, it provides a solution to escape the so-called Hansson–Sen paradox (Hansson in Foundational problems in the special sciences. Reidel Publishing Company, Dordrecht, 1977; Sen in Personal income distribution. North-Holland, Amsterdam, pp 81–94, 1978) that affects the standard ethical indices and which corresponds to a counterintuitive increase in inequality as a result of a concave transformation of the utility function. A normalised version of the generalised entropies behaves appropriately after such a transformation.

Suggested Citation

  • Brice Magdalou, 2018. "Income inequality measurement: a fresh look at two old issues," Post-Print hal-01802703, HAL.
    • Handle: RePEc:hal:journl:hal-01802703
    DOI: 10.1007/s00355-018-1121-9
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Buhong Zheng, 2021. "Stochastic dominance and decomposable measures of inequality and poverty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(2), pages 228-247, April.

    More about this item

    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:hal:journl:hal-01802703. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.