On the Measurement of Inequality
TL;DR: In this paper, the problem of comparing two frequency distributions f(u) of an attribute y which for convenience I shall refer to as income is defined as a risk in the theory of decision-making under uncertainty.
About: This article is published in Journal of Economic Theory.The article was published on 1970-09-01. It has received 5002 citations till now. The article focuses on the topics: Income inequality metrics & Income distribution.
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TL;DR: In this article, distribution and welfare effects of changes in block price systems are evaluated, and a method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system.
Abstract: In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to compare, for the Metropolitan Region of Sao Paulo, alternative pricing policies on the basis of their demand, welfare and distribution effects of changing water prices. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.
71 citations
Cites background from "On the Measurement of Inequality"
...For given income levels yk, k = 1, ..., K , for each individual, social welfare is written as (see e.g. Atkinson, 1970; Deaton, 1997; Slesnick, 1998) W = 1 K K ∑ k=1 y1−ρk 1 − ρ (14) with ρ > 0 an indicator controlling for the degree of inequality aversion in which ρ = 0 yields a utilitarian social…...
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TL;DR: This study describes and compares the characteristics of four different domains of personal collaboration networks, i.e., electrical engineering, information processing, polymer science, and biochemistry, and considers the development of networks.
Abstract: Many studies have tried to describe patterns of research collaboration through observing coauthorship networks. Those studies mainly analyze static networks, and most of them do not consider the development of networks. In this study, we turn our attention to the development of personal collaboration networks. On the basis of an analysis from two viewpoints, i.e., growth in the number of collaborating partners and change in the relationship strength with partners, we describe and compare the characteristics of four different domains, i.e., electrical engineering, information processing, polymer science, and biochemistry.
71 citations
TL;DR: The authors proposed rigorous definitions of the balanced growth equivalents (BGE) for multiple regions and under uncertainty, and showed that the change in the BGE is independent of the assumed scenario of per capita income.
Abstract: The Stern Review added balanced growth equivalents (BGE) to the economic climate change research agenda. We first propose rigorous definitions of the BGE for multiple regions and under uncertainty. We show that the change in the BGE is independent of the assumed scenario of per capita income. For comparable welfare economic assumptions as the Stern Review, we calculate lower changes in BGE between a business as usual scenario and one without climate impacts with the model FUND than the Stern Review found with the model PAGE. We find that mitigation policies give even lower changes in BGE and argue that those policy choices should be the focus of the research effort rather than total damage estimates. According to our results, the current carbon tax should be below $55/tC. Sensitivity analyses show that the Stern Review chose parameters that imply high impact estimates. However, for regionally disaggregated welfare functions, we find changes in BGE that are significantly higher than the results from the Stern Review both for total damage as for policy analysis. With regional disaggregation and high risk aversion, we observe fat tails and with that very high welfare losses.
71 citations
Cites methods from "On the Measurement of Inequality"
...This combines the BGE concept with a measure of inequality very much like Atkinson‟s (1970) ....
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Journal Article•
TL;DR: This paper reviewed the state of the art in poverty analysis under a number of interrelated headings: chronic vs. transient poverty, poverty and vulnerability, the determination of the poverty line across time and countries, quantitative vs. qualitative approach to poverty measurement, and growth, inequality and poverty.
Abstract: The objective of this paper is to review a number of issues related to poverty, while taking stock of the ongoing research. Most of the remaining unresolved issues in poverty analysis are related directly or indirectly to the dynamics of poverty. Before the development community can become more successful in designing and implementing poverty-alleviation strategies, within the context of growth, we need to understand better the conditions under which some households remain permanently (chronically) poor and how others move in and out of poverty. In what follows we review the state of the art under a number of interrelated headings: (1) Chronic vs. transient poverty; (2) Poverty and vulnerability; (3) The determination of the poverty line across time and countries; (4) The quantitative vs. qualitative approach to poverty measurement; and (5) Growth, inequality and poverty.
71 citations
TL;DR: In this article, the authors explore the relationship between technological change and income inequality in the United States since the late 1960s and find evidence of an increase in the inequality of total family income measured across families.
Abstract: This article explores the relationship between technological change and income inequality in the United States since the late 1960s. The analysis focuses primarily on patterns and trends in the dispersion of various distributions of earnings and income during this recent period of rapid technological progress. The authors review relevant literature and perform several empirical analyses using microdata from the March Current Population Surveys from 1968 to 1986. They find little empirical evidence that earnings inequality measured across individual workers has increased since the late 1960s and even less evidence that any changes that have occurred have resulted from the effect of technological change on the demand for labor. On the other hand they find evidence of an increase since the late 1960s in the inequality of total family income measured across families. Moreover much of this increase appears to be due to changes in family composition and labor supply behavior suggesting that the main effects of recent technological change on inequality have been supply-side in nature. (SUMMARY IN FRE AND SPA) (EXCERPT)
71 citations
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TL;DR: In this article, a measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another.
Abstract: This paper concerns utility functions for money. A measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another. Risks are also considered as a proportion of total assets.
5,207 citations
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"On the Measurement of Inequality" refers background in this paper
...3 See Rothschild and Stiglitz [13], Hadar and Russell [ 5 ], and Hanoch and Levy [6]....
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1,738 citations
"On the Measurement of Inequality" refers methods in this paper
...Then by applying the results of Pratt [l 11, Arrow [ 2 ], and others, we can see that this requirement (which may be referred to as constant (relative) inequality-aversion) implies that U(y) has the form...
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1,544 citations
TL;DR: In this paper, an analysis of the first step of the decision-making process of an individual decision maker among alternative risky ventures is presented, in terms of a single dimension such as money, both for the utility functions and for the probability distributions.
Abstract: Publisher Summary The choice of an individual decision maker among alternative risky ventures may be regarded as a two-step procedure. The decision maker chooses an efficient set among all available portfolios, independently of his tastes or preferences. Then, the decision maker applies individual preferences to this set to choose the desired portfolio. The subject of this chapter is the analysis of the first step. It deals with optimal selection rules that minimize the efficient set by discarding any portfolio that is inefficient in the sense that it is inferior to a member of the efficient set, from point of view of each and every individual, when all individuals' utility functions are assumed to be of a given general class of admissible functions. The analysis presented in the chapter is carried out in terms of a single dimension such as money, both for the utility functions and for the probability distributions. However, the results may easily be extended, with minor changes in the theorems and the proofs, to the multivariate case. The chapter explains a necessary and sufficient condition for efficiency, when no further restrictions are imposed on the utility functions. It presents proofs of the optimal efficiency criterion in the presence of general risk aversion, that is, for concave utility functions.
1,160 citations