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: Analytically appropriate upper boundaries for conditional diversity determined by some specific group characteristics are demonstrated, avoiding the bias related to absolute diversity.
Abstract: Workgroup diversity can be conceptualized as variety, separation, or disparity. Thus, the proper operationalization of diversity depends on how a diversity dimension has been defined. Analytically,...
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Cites background from "On the Measurement of Inequality"
...…standard deviation, and mean euclidean distance have presented developments and improvements in the values of these indexes (gibbs & Martin, 1962; atkinson, 1970; McDonald & Dimmick, 2003). some studies focus on the normalization of these indexes to control for the comparison of samples with…...
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TL;DR: In this article, a regionally disaggregated computable general equilibrium model is used to analyze the differential welfare impacts of a cash transfer program targeted at rural areas, where the direct effect of the transfers decreases regional income differentials, but the indirect effects depend on how the program is financed.
Abstract: Using a regionally disaggregated computable general equilibrium model, we analyze the differential welfare impacts of a cash transfer program targeted at rural areas. The direct effect of the transfers decreases regional income differentials, but the indirect effects depend on how the program is financed. Financing the program with a more efficient tax system is also less regressive and has favorable urban impacts. The less efficient instruments result in relatively higher incomes in all rural regions, but are more regressive. The increasing share of urban poverty highlights the shortcomings of rural targeting and raises the issue of horizontal equity.
49 citations
TL;DR: In this article, a particular measure of deprivation, called the capability failure ratio (CFR), is proposed to measure the dimensions of longevity, knowledge and income of a human being and an adjusted version of the CFR may be derived.
Abstract: This paper advances a particular measure of deprivation - called the Capability Failure Ratio (CFR) - on the dimensions of longevity, knowledge and income, and suggests how an (inequality-) 'adjusted' version of the CFR may be derived. These measurement concerns are explored in the context of relevant State-wise data for the Indian Union. The paper thus makes an attempt to enrich the analysis of human predicament by sensitising 'measures of central tendency' to distributional concerns.
49 citations
TL;DR: In this article, the authors examined the impact of zakat on income inequality in Pakistan and found that it does not reduce measured income inequality, though the amount of change is small.
Abstract: Zakat is an important form of religiously-mandated charity under Islam. This paper examines its impact on income inequality in Pakistan. Data from 1987-88 are used to construct two income distributions-one that would have obtained if zakat had not been given, and one that did obtain when such giving took place. Atkinson-Kolm-Sen relative indices of income inequality are computed which show that zakat does reduce measured income inequality in Pakistan. Both intra-province and inter-province components of over-all inequality decline, though the amount of change is small. So give to the kinsman Rb due, and to the needy, and to the wayfarer. That b best for those who seek Allah's countenance. The Koran Islam is the world's second largest religion, with nearly a billion followers worldwide. Under Islam, individuals have five fundamental duties, called Pillars of the Faith. One of these is a special duty-falling on those most able to bear it-to share Allah's bounty with those less fortunate. In early Muslim society, institutions emerged to implement these Koranic injunctions. Most important of these was zakat-an annual tax levied on wealth above some threshold, the proceeds of which were distributed to the needy. Zakat and related forms of religiously-mandated charity survive today, in one form or another, as central elements of economic life in Muslim societies.' To virtually all interpreters zakat is understood to include a levy on "idle" wealth, and 2.5 percent per year is considered something of a benchmark. The traditions of Islam, the Sunnah, call for payment of zakat on some forms of "productive wealth," as well. However, there are obvious problems of definition in notions of "idle" and "productive" wealth, and neither the Koran itself nor the Sunnah provide unambiguous guidance to modern Muslims on precisely how their obligation should be reckoned. Nonetheless, all Muslims are aware that they have some such obligation, whether broadly or narrowly conceived, and all recognize that the object of that obligation is to reduce economic inequality and alleviate misery within their community. This paper presents empirical evidence on the degree to which zakat- and related forms of religiously-mandated charitable giving-achieve their intended objectives in Pakistan, one of the most populous Islamic republics in the world. 'pryor (1985) has described the outlines of an Islamic economic system in the non-Islamic literature. As-Sadr (1982) provides more detail and compares the Islamic system to alternatives from an Islamic point of view. Kuran (1986) presents a cogent survey and critical analysis of recent literature on Islamic economics.
49 citations
TL;DR: In this paper, a class of poverty measures is identified, the members of which satisfy strong monotonicity and transfer conditions, and are closely related to indices of income inequality based on the notion of a mean-equivalent income.
Abstract: A class of poverty measures is identified, the members of which satisfy strong monotonicity and transfer conditions. These measures are closely related to indices of income inequality based on the notion of a mean-equivalent income. A restriction on the class of admissible measures allows poverty to be interpreted in terms of the loss in mean-equivalent income resulting from the fact that some people are poor. Copyright 1987 by Royal Economic Society.
48 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.
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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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"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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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