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 paper, the authors consider non-anonymous growth incidence curves that plot income growth rates against the various quantiles of the initial distribution and derive dominance criteria to account for the inequality of individual income growth rate, conditional on initial income.
Abstract: The distributional incidence of growth is generally analyzed by comparing the quantiles of the pre- and post-growth income distribution -e.g. the so-called Growth Incidence Curves. Such an approach based on an implicit re-ranking of individual incomes ignores income mobility by assuming that only post-growth income matters in social welfare. By contrast, this paper takes the view that "status quo matters" and that social welfare should logically be defined on both inital and terminal income. This leads to consider 'non-anonymous' Growth Incidence Curves that plot income growth rates against the various quantiles of the initial distribution. Dominance criteria that generalize those available for standard growth incidence curves are derived, which account for the inequality of individual income growth rates, conditional on initial income. An application to the cross-country distributional feature of global growth illustrates the analysis.
70 citations
TL;DR: In this article, the authors provide an empirical test for the comparative behavior of several suitable inequality measures and environmental indicators in the international context and support the hypothesis that in some cases there are differences among measures in both the sign of the evolution over time and its size.
70 citations
TL;DR: The authors examined the relationship between scarcity and inequality, especially in the comparison between the behavior of agrarian and industrial societies, and found that major revolutions almost always occur in predominantly agrarians but almost never in industrial ones.
Abstract: This study examines the relationship between scarcity and inequality, especially in the comparison between the behavior of agrarian and industrial societies. Specifically, we ask why it is that major revolutions almost always occur in predominantly agrarian societies but almost never in industrial ones. Whereas industrialized countries experience increased equality with increased a bundance, and follow a hypothesized curvilinear function, this is not true for agrarian societies as evidenced in three data sets. Redistributive and authenticating revolutions follow from the scarcity condition. Exponential distributions of landholdings and increased inequality are found to apply in agrarian, prerevolutionary situations. Land inequality is a potent predictor of mass revolution. Population growth is found to be a major source of inequality, and the emergence of inequality even in advanced industrial societies suggests certain similarities with the early stages of the agrarian sector. Thus, the future stability ...
69 citations
01 Mar 1975
TL;DR: In this paper, the authors compare the results of 44 estudios of incidencia tributaria parcial with a distribucion hipotetica, and conclude that the latter is more likely to result in a worse result.
Abstract: La mayor parte de los gastos publicos se financia con impuestos, los cuales no solo producen ingresos sino que a menudo constituyen uno de los principales instrumentos de que todo gobierno dispone para ejercer una influencia en la distribucion de ingresos. Los efectos de los gastos publicos en la redistribucion de los ingresos han recibido mucha atencion en los ultimos anos por lo que crece constantemente el numero de estudios de la incidencia fiscal que estiman, para un pais determinado en un momento determinado, a quien aprovechan los gastos y quien tiene que soportar la carga impositiva. Del examen a que se someten dichos estudios en el trabajo que aqui se resume se desprende que se basan en datos bastante disparejos y utilizan diversas metodologias. Como los resultados dependen mucho de la metodologia, hay que abstenerse de toda comparacion de los resultados de diferentes estudios, o bien realizarla con suma cautela. Esta cautela se impone no solo por las dificultades con los datos y por las variaciones que causa el uso de diferentes hipotesis de incidencia tributaria y de gastos o de diferentes conceptos de ingresos sino tambien a causa de algunos problemas mas fundamentales que plantean los estudios de incidencia fiscal en su conjunto. En esos estudios se procede inevitablemente a una comparacion de la distribucion real de los ingresos con una distribucion hipotetica, comparacion sin sentido en realidad porque la distribucion real de ingresos esta determinada en gran parte por el sistema real de tributacion y gastos, mientras que la hipotetica, o sea la que existiria en una situacion de presupuesto cero o con un presupuesto totalmente distinto, es o bien absurda o bien desconocida. No queda claro, por ende, que son en realidad los dos terminos de esa comparacion en ese enfoque. Mientras no se disponga de modelos de equilibrio general que permitan a los investigadores entender por completo los efectos de sustituciones masivas en el presupuesto sobre la distribucion de ingresos, los estudios de incidencia parcial seran mas fidedignos que los de incidencia del sistema. Pese a todos los defectos conceptuales y empiricos de que adolecen los estudios de incidencia fiscal, es interesante examinar los resultados de los estudios realizados sobre paises en desarrollo. De los 44 estudios de incidencia tributaria que se mencionan en el trabajo que aqui se resume (excluyendo los 22 estudios sobre India), solo en 32 se puede tener una impresion general acerca de la graduacion de la tasa impositiva y 22 de ellos sugieren una cierta progresividad en la estructura de las tasas impositivas efectivas. Esta perspectiva "favorable" contrasta con la sospecha bastante corriente de que los sistemas de rentas fiscales que se basan sobre todo en impuestos indirectos son regresivos. La naturaleza dualista de la mayoria de las economias en desarrollo y el hecho de que las estructuras de consumo de los que viven en el sector de subsistencia apenas incluyan productos gravados por impuestos indirectos deberia inducir a pensar, por el contrario, que los impuestos indirectos pueden constituir un elemento progresivo en el sistema tributario. La mayoria de los estudios llegan a esta conclusion si bien indican con frecuencia que la progresividad observada no alcanza a las clases de ingresos mas altos. El impuesto a los ingresos personales, considerado generalmente como el medio mas eficaz de gravar a los ricos, carece relativamente de importancia en la mayoria de los paises en desarrollo. La administracion a menudo mas eficaz de los impuestos indirectos, la frecuente existencia de tasas impositivas diferentes para diversos articulos asi como las estructuras de consumo muy desiguales en los diversos subgrupos de contribuyentes han producido como resultado una estructura progresiva de incidencia de los impuestos indirectos en muchos paises. Las generalizaciones sobre impuestos en los paises desarrollados, en los que resulta que los impuestos directos son progresivos (hasta un cierto nivel) y los indirectos son proporcionales o regresivos, no son relevantes para el analisis de la mayoria de los paises en desarrollo, en que esos resultados en general se invierten. La carga fiscal neta o el impacto total del presupuesto sobre la redistribucion de ingresos se obtiene llegando a estimaciones consolidadas de la incidencia fiscal y de gastos para cada subgroupo de la poblacion. La mayoria de estos estudios llegan a la conclusion de que los muy ricos son contribuyentes netos de las operaciones gubernamentales mientras que todos los demas son beneficiarios netos. Esto se debe a que no se asigna a nadie la mayor parte de la carga del financiamiento del deficit, a que algunos gastos se financian con ayuda extranjera y a que se supone que la incidencia de algunos impuestos se traslada fuera del pais. Suponiendo que se pudiera extraer alguna que otra conclusion de estos estudios, ella seria la de que los gobiernos con voluntad politica de redistribuir ingresos mediante el instrumento presupuestario es probable que lo logren con el maximo de eficacia reforzando cautelosamente los impuestos progresivos y aumentado los gastos que redunden en beneficio de las familias con ingresos bajos. La mejor contribucion que puede hacer toda futura investigacion de la incidencia fiscal consiste en indicar exactamente que instrumentos de politica pueden empujar, en determinadas circunstancias, a la distribucion en la direccion deseada. Teoricamente es mas plausible, y politicamente mas relevante, abandonar el tipo de estudios que pretenden estimar el impacto redistributivo del presupuesto en su conjunto, o de todos los impuestos, o de todos los gastos, y dedicarse mas bien a estimaciones mas desagregadas.
69 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