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Empirical Welfare Analysis: When Preferences Matter

  • Jean-François Carpantier

    ()

    (University of Luxembourg)

  • Christelle Sapata

    ()

    (Department of Applied Economics, Universitat Autònoma de Barcelona)

Fleurbaey and Maniquet have proposed the criteria of conditional equality and of egalitarian equivalence to assess the equity among individuals in an ordinal setting. Empirical applications are rare and only partially consistent with their framework. We propose a new empirical approach that relies on individual preferences, is consistent with the ordinal criteria and enables to compare them with the cardinal criteria. We estimate a utility function that incorporates individual heterogeneous preferences, obtain ordinal measures of well-being and apply conditional equality and egalitarian equivalence. We then propose two cardinal measures of well-being, that are comparable with the ordinal model, to compute Roemer’s and Van de gaer’s criteria. Finally we compare the characteristics of the worst-off displayed by each criterion. We apply this model to a sample of US micro data and obtain that about 18% of the worst-off are not common to all criteria.

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File URL: http://www.ecap.uab.es/RePEc/doc/wpdea1304.pdf
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Paper provided by Department of Applied Economics at Universitat Autonoma of Barcelona in its series Working Papers with number wpdea1304.

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Length: 39 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:uab:wprdea:wpdea1304
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  1. FLEURBAEY, Marc & MANIQUET, François, . "Fair social orderings when agents have unequal production skills," CORE Discussion Papers RP -1805, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Bonin, Holger & Schneider, Hilmar, 2006. "Analytical prediction of transition probabilities in the conditional logit model," Economics Letters, Elsevier, vol. 90(1), pages 102-107, January.
  3. Ramos, Xavi & Van de gaer, Dirk, 2012. "Empirical Approaches to Inequality of Opportunity: Principles, Measures, and Evidence," IZA Discussion Papers 6672, Institute for the Study of Labor (IZA).
  4. Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7), pages 488-499.
  5. André Decoster & Peter Haan, 2010. "Empirical Welfare Analysis in Random Utility Models of Labour Supply," Discussion Papers of DIW Berlin 1074, DIW Berlin, German Institute for Economic Research.
  6. Dirk Van de Gaer & Michel Martinez & Erik Schokkaert, 1998. "Measuring Intergenerational Mobility and Equality of Opportunity," Public Economics Working Paper Series ces9810, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  7. Rolf Aaberge & Ugo Colombino & Steinar Strøm, 2004. "Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy," Journal of Population Economics, Springer, vol. 17(4), pages 767-785, December.
  8. Schokkaert, Erik & Van de gaer, Dirk & Vandenbroucke, Frank & Luttens, Roland Iwan, 2004. "Responsibility sensitive egalitarianism and optimal linear income taxation," Mathematical Social Sciences, Elsevier, vol. 48(2), pages 151-182, September.
  9. Marc Fleurbaey & Fran�ois Maniquet, 2006. "Fair Income Tax," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 55-83.
  10. Fleurbaey, Marc, 2008. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199215911.
  11. Marc Fleurbaey & François Maniquet, 2006. "Compensation and responsibility," Working Papers halshs-00121367, HAL.
  12. Marc Fleurbaey & Walter Bossert, 1996. "Redistribution and compensation (*)," Social Choice and Welfare, Springer, vol. 13(3), pages 343-355.
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