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.
Citations
More filters
TL;DR: In this paper, the authors measure inequality of opportunity for earnings acquisition in the U.S. between 1968 and 2001, using the PSID from 1968 to 2001, and conclude that inequality represents between 20 and 43% of earnings inequality, but decreases all over the period reaching around 18% in 2001.
Abstract: We measure inequality of opportunity for earnings acquisition in the U.S. between 1968 and 2001. Following recent theories of social justice, earnings determinants are divided into two parts: Circumstances, which are characteristics outside individual control and effort representing factors impacting earnings but under individuals’ responsibility. Equality of opportunity requires that inequality of circumstances must be corrected while differences of effort must remain unaltered. Circumstances are represented by parental education and occupation, ethnic origin, place of birth and age. Effort is modeled with schooling choices and labour supply decisions. Using the PSID from 1968 to 2001, we provide two alternative assessments of inequality of opportunity using counterfactual distributions. The statistical framework is semi-parametric and builds on duration models. Finally, we conclude that inequality of opportunity represents between 20 and 43% of earnings inequality, but decreases all over the period reaching around 18% in 2001.
104 citations
TL;DR: This article analysed labour force trends, household composition and income inequality between 1982 and 1993-94, using unit record tapes for the two years produced by the Australian Bureau of Statistics (ABC).
Abstract: This article analyses labour force trends, household composition and income inequality between 1982 and 1993–94, principally using unit record tapes for the two years produced by the Australian Bureau of Statistics. The results suggest that earnings and private income inequality increased during these 11 years. However, increasing progressivity in the income tax and, in particular, the government cash transfer system fully offset this growing market-based inequality. Summary inequality measures thus suggest that the distribution of disposable (post-tax/transfer) and equivalent disposable income was much the same in 1993–94 as in 1982. However, this apparent stability disguised real income gains at the top and bottom of the income spectrum and losses for the middle 50 per cent of Australians.
104 citations
Cites background from "On the Measurement of Inequality"
...The Lorenz curves for gross and equivalent income cross (Atkinson 1970), so the related Gini coefficient results are not robust for these two income measures....
[...]
01 Jan 2001
TL;DR: In this paper, the authors evaluate the distributional power of Mexico's Programa Nacional de Educacion, Salud y Alimentacion (PROGRESA) transfers using the so-called distributional characteristic.
Abstract: Using both national-sample and program-level census survey data, we evaluate the distributional power of Mexico's Programa Nacional de Educacion, Salud y Alimentacion (PROGRESA) transfers using the so-called distributional characteristic.These transfers are targeted both geographically at marginal localities and at poor households within these localities. Transfers are also conditioned on household members attending school and health clinics. We show that the program has a relatively high distributional power compared to a range of alternatives considered. Although geographic targeting has a relatively large effect on the distributional power of the program, the demographic structure of transfers is more important than household targeting. However, the gains from household targeting increase as the program expands into less marginal localities. Within the structure of transfers, the education component is distributionally more powerful than the food component, reflecting the fact that the former is based on household demographics, while the latter is uniform across households. Restructuring education grants towards secondary schooling in order to generate higher education impacts does not appear to affect the distributional power of the program. In any case, any adverse impact could be offset by increasing the cap on transfers, which is regressive. Take-up of the program is high but relatively higher among the poorest households, thus increasing distributional power. However, this effect is mitigated by the fact that, conditional on program take-up, the poorest households take up a relatively lower proportion of potential transfers.
104 citations
TL;DR: In this article, the authors propose a general, Cy =AGy. convenient covariance approach to calculate the Gini index, which is based on the Lorenz curve mation method.
Abstract: compromises on accuracy, researchers can y fo calculate Gini indices easily and cheaply using widely available data management where Fi[g(x)] - f' g(x)dF(x)/g(x), g(x) and statistical packages such as SPSSX. fox g(x)dF(x), and'-O' denotes 'mean.' If g(x) They do not have to find or develop a spe- - x, the concentration curve and concencial computer program or some approxi tration index for g(x) are the Lorenz curve mation method (probably based on group- and Gini index, respectively, for x. Note ing of the original micro-data), as they do that to calculate the Gini index for y, reat present. cipients must be ranked by y, not x; in The message of this note is that this general, Cy =AGy. (See Kakwani 1980, pp. convenient covariance' approach has much 174-175, for the relationship between wider applicability than appears to have them.)
104 citations
TL;DR: In this article, the authors analyzed the relationship between growth patterns, poverty, and inequality in Brazil during its globalization process, focusing on the role played by the labor market and social programs.
104 citations
References
More filters
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
Posted Content•
1,748 citations
"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]....
[...]
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...
[...]
TL;DR: JSTOR as discussed by the authors is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship, which is used to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources.
Abstract: you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org.
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