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Adopting income groups' weights in multidimensional inequality measures; Empirical case of Indonesia

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  • Suska

Abstract

The existing literature on multidimensional inequality do not explicitly include weights of each dimension for different groups such as income groups. It is important to distinguish the value of each dimension for each income group in order to reflect the different preferences which are believed to increase welfare. This paper incorporates dimensional weights based on income groups into multidimensional inequality measures. Using ordered probit model of subjective well-being for weights estimation, the results applied on Gini coefficient of well-being, Maasoumi's multidimensional inequality measure and Multidimensional Gini index of Decancq and Lugo to estimate multidimensional inequality with Indonesia data. The results show applying dimensional weights based on income groups affect multidimensional inequality estimation differently depends on degree of substitution used in the estimation.

Suggested Citation

  • Suska, 2015. "Adopting income groups' weights in multidimensional inequality measures; Empirical case of Indonesia," Discussion Papers 15/29, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:15/29
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    Keywords

    multidimensional inequality; subjective well-being; ordered probit model;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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