Preserving Dominance Relations Through Disaggregation: The Evil and the Saint
Disaggregation arises when broad categories like households budget units are divided into elementary units as individual income recipients. We study the preservation of stochastic dominance for every order beyond two after disaggregation: If we observe a dominance relation among household income distributions, it is also true at the individual level. We find necessary and sufficient conditions satisfied by the common sharing rule adopted by households to divide the cake among individuals. The sharing function, which maps the household income into the outcome of the disadvantaged individual, must have derivatives of the same sign as the utility function characterizing the stochastic order of interest. In addition, the household has to follow a compensating rule, meaning that at the margin the distribution should be in favor of the disadvantaged individual.
|Date of creation:||Oct 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.dse.univr.it
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Muliere, Pietro & Scarsini, Marco, 1989. "A note on stochastic dominance and inequality measures," Journal of Economic Theory, Elsevier, vol. 49(2), pages 314-323, December.
- Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 485-97, July.
- Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-77, January.
- Zheng, Buhong, 2000. " Poverty Orderings," Journal of Economic Surveys, Wiley Blackwell, vol. 14(4), pages 427-66, September.
- Michel Le Breton & Eugenio Peluso, 2009. "Third-degree stochastic dominance and inequality measurement," Journal of Economic Inequality, Springer, vol. 7(3), pages 249-268, September.
- Foster, James E. & Shorrocks, Anthony F., 1988. "Inequality and poverty orderings," European Economic Review, Elsevier, vol. 32(2-3), pages 654-661, March.
- Peluso, Eugenio & Trannoy, Alain, 2007.
"Does less inequality among households mean less inequality among individuals?,"
Journal of Economic Theory,
Elsevier, vol. 133(1), pages 568-578, March.
- Eugenio Peluso & Alain Trannoy, 2004. "Does less inequality among households mean less inequality among individuals?," Department of Economics University of Siena 432, Department of Economics, University of Siena.
- Eugenio Peluso & Alain Trannoy, 2004. "Does Less Inequality among Households Mean Less Inequality among Individuals?," IDEP Working Papers 0407, Institut d'economie publique (IDEP), Marseille, France, revised Jun 2004.
- Eugenio Peluso & Alain Trannoy, 2004. "Does less inequality among households mean less inequality among individuals ?," THEMA Working Papers 2004-11, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Markus Haas, 2007. "Do investors dislike kurtosis?," Economics Bulletin, AccessEcon, vol. 7(2), pages 1-9.
- Fishburn, Peter C. & Willig, Robert D., 1984. "Transfer principles in income redistribution," Journal of Public Economics, Elsevier, vol. 25(3), pages 323-328, December.
- Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
When requesting a correction, please mention this item's handle: RePEc:ver:wpaper:60/2009. 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: (Michael Reiter)
If references are entirely missing, you can add them using this form.