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Book part
Publication date: 15 December 2004

Kamol Chumrusphonlert, John P. Formby and John A. Bishop

Dominance techniques are used to analyze and rank inequality, welfare, and poverty across regions in Thailand in the 1990s. Inference-based dominance methods are applied to…

Abstract

Dominance techniques are used to analyze and rank inequality, welfare, and poverty across regions in Thailand in the 1990s. Inference-based dominance methods are applied to consumption expenditure microdata from the Household Socio-Economic Surveys (SES) of 1992, 1994, 1996, 1998 and 2000. Attention is focused on the period immediately before and after the economic contraction of 1996–1997. Lorenz dominance is employed to assess inequality, while first-order Engel food share dominance is applied to rank welfare across time and among regions. Poverty is evaluated by comparing truncated food-share quantile functions. The evidence reveals that the economic crisis in 1997 seems to affect inequality in Bangkok (the richest region) more than the Northeast (the poorest region), and most dramatic changes occur in the North and South. Welfare in Bangkok is unambiguously higher than in other regions before and after economic contraction. In fact, the great economic contraction changes the rankings of economic well-being and poverty only in the North, South, and Northeast.

Details

Studies on Economic Well-Being: Essays in the Honor of John P. Formby
Type: Book
ISBN: 978-0-76231-136-1

Book part
Publication date: 23 May 2007

Ismael Ahamdanech Zarco and Carmelo García Pérez

In a period of political change in the European Union, when the European Constitution is in the centre of the debate, the social convergence among European Union countries is a…

Abstract

In a period of political change in the European Union, when the European Constitution is in the centre of the debate, the social convergence among European Union countries is a crucial issue. However, the measurement of welfare, inequality and poverty and the comparisons among countries are issues of great controversy. One of the main reasons for this is that implicit or explicit value judgements have to be made, and it is not easy to determine which of these value judgements are the most appropriate ones. In this paper we apply inference-based stochastic dominance methods to study welfare, inequality and poverty in European Union countries in 2000, applying purchasing power parities from the OECD. There are two main advantages of the methods and data used in this work: on the one hand, the stochastic method uses explicit and widely, though not universally, accepted assumptions, and if this small number of assumptions is accepted, the welfare and poverty ranking that the method provides is unambiguous. On the other hand, the use of the European Community Household Panel permits the comparisons in welfare, inequality and poverty among different countries using harmonised data. In addition, the use of inference tests permits a more precise ranking.

Details

Inequality and Poverty
Type: Book
ISBN: 978-0-7623-1374-7

Book part
Publication date: 15 October 2008

Buhong Zheng

This note formally investigates the applicability of stochastic dominance (Lorenz dominance) to ordinal data such as self-reported health status. We confirm that for ordinal data…

Abstract

This note formally investigates the applicability of stochastic dominance (Lorenz dominance) to ordinal data such as self-reported health status. We confirm that for ordinal data distributions, stochastic dominance has limited applicability in ranking social welfare, while it has no applicability in ranking inequality.

Details

Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting
Type: Book
ISBN: 978-1-84855-135-0

Book part
Publication date: 14 July 2006

Duangkamon Chotikapanich and William E. Griffiths

Hypothesis tests for dominance in income distributions has received considerable attention in recent literature. See, for example, Barrett and Donald (2003a, b), Davidson and…

Abstract

Hypothesis tests for dominance in income distributions has received considerable attention in recent literature. See, for example, Barrett and Donald (2003a, b), Davidson and Duclos (2000) and references therein. Such tests are useful for assessing progress towards eliminating poverty and for evaluating the effectiveness of various policy initiatives directed towards welfare improvement. To date the focus in the literature has been on sampling theory tests. Such tests can be set up in various ways, with dominance as the null or alternative hypothesis, and with dominance in either direction (X dominates Y or Y dominates X). The result of a test is expressed as rejection of, or failure to reject, a null hypothesis. In this paper, we develop and apply Bayesian methods of inference to problems of Lorenz and stochastic dominance. The result from a comparison of two income distributions is reported in terms of the posterior probabilities for each of the three possible outcomes: (a) X dominates Y, (b) Y dominates X, and (c) neither X nor Y is dominant. Reporting results about uncertain outcomes in terms of probabilities has the advantage of being more informative than a simple reject/do-not-reject outcome. Whether a probability is sufficiently high or low for a policy maker to take a particular action is then a decision for that policy maker.

The methodology is applied to data for Canada from the Family Expenditure Survey for the years 1978 and 1986. We assess the likelihood of dominance from one time period to the next. Two alternative assumptions are made about the income distributions – Dagum and Singh-Maddala – and in each case the posterior probability of dominance is given by the proportion of times a relevant parameter inequality is satisfied by the posterior observations generated by Markov chain Monte Carlo.

Details

Dynamics of Inequality and Poverty
Type: Book
ISBN: 978-0-76231-350-1

Book part
Publication date: 23 May 2007

Jean-Yves Duclos and Paul Makdissi

This paper develops criteria for an alternative concept of inequality dominance and shows how they relate to criteria for comparing relative poverty. The results warn inter alia…

Abstract

This paper develops criteria for an alternative concept of inequality dominance and shows how they relate to criteria for comparing relative poverty. The results warn inter alia against the use of some popular indices of inequality. They do, however, provide an ethical basis for the use of other popular indices of (restricted) inequality as potential relative poverty indices. The results also suggest an interesting extension of the Schutz coefficient as well as a use of Lorenz curves for the analysis of relative poverty and restricted inequality. A graphical illustration shows how the new criteria of restricted inequality dominance extend the ranking power of previously proposed inequality dominance criteria.

Details

Inequality and Poverty
Type: Book
ISBN: 978-0-7623-1374-7

Book part
Publication date: 30 September 2014

Shiyi Chen and Buhong Zheng

This paper applies a recently developed method of ranking socioeconomic inequality in health to ranking U.S. happiness from 1994 to 2012 using the GSS data. We also compare…

Abstract

This paper applies a recently developed method of ranking socioeconomic inequality in health to ranking U.S. happiness from 1994 to 2012 using the GSS data. We also compare happiness between subgroups as decomposed by gender, race, and age. We establish and test a monotone condition of happiness – a richer person is likely to be happier. Under the monotone condition, standard tools of welfare and inequality ranking can be applied straightforwardly.

Details

Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting
Type: Book
ISBN: 978-1-78350-556-2

Keywords

Book part
Publication date: 6 July 2007

Ian Preston

This paper discusses inequality orderings based explicitly on closing up of income gaps, demonstrating the links between these and other orderings, the classes of functions…

Abstract

This paper discusses inequality orderings based explicitly on closing up of income gaps, demonstrating the links between these and other orderings, the classes of functions preserving the orderings and applications showing their usefulness in comparison of economic policies.

Details

Equity
Type: Book
ISBN: 978-0-7623-1450-8

Book part
Publication date: 6 July 2007

Paul D. Thistle

For over 60 years, Lerner's (1944) probabilistic approach to the welfare evaluation of income distributions has aroused controversy. Lerner's famous theorem is that, under…

Abstract

For over 60 years, Lerner's (1944) probabilistic approach to the welfare evaluation of income distributions has aroused controversy. Lerner's famous theorem is that, under ignorance regarding who has which utility function, the optimal distribution of income is completely equal. However, Lerner's probabilistic approach can only be applied to compare distributions with equal means when the number of possible utility functions equals the number of individuals in the population. Lerner's most controversial assumption that each assignment of utility functions to individuals is equally likely. This paper generalizes Lerner's probabilistic approach to the welfare analysis of income distributions by weakening the restrictions of utilitarian welfare, equal means, equal numbers, and equal probabilities and a homogeneous population. We show there is a tradeoff between invariance (measurability and comparability) and the information about the assignment of utility functions to individuals required to evaluate expected social welfare.

Details

Equity
Type: Book
ISBN: 978-0-7623-1450-8

Book part
Publication date: 30 December 2013

Oihana Aristondo and Casilda Lasso de la Vega

When health is measured by a bounded variable, differences in health can be presented as levels of attainment or shortfall. Measurement of heath inequality then usually involves…

Abstract

When health is measured by a bounded variable, differences in health can be presented as levels of attainment or shortfall. Measurement of heath inequality then usually involves the choice of either the attainment or the shortfall distribution, and this choice may affect comparisons of inequality across populations. A number of indices have been introduced to overcome this problem. This chapter proposes a framework in which attainment and shortfall distributions can be jointly analyzed. Joint distributions of attainments and shortfalls are defined from points of view consistent with concerns for relative, absolute or intermediate inequality. Inequality measures invariant according to the corresponding ethical criterion are then applied. A dominance criterion that guarantees unanimous rankings of the joint distributions is also proposed.

Details

Health and Inequality
Type: Book
ISBN: 978-1-78190-553-1

Keywords

Book part
Publication date: 15 October 2008

Vito Peragine and Laura Serlenga

Purpose: This paper aims at studying the degree of equality of educational opportunity in the Italian university system.Methodology: We build on the approaches developed by…

Abstract

Purpose: This paper aims at studying the degree of equality of educational opportunity in the Italian university system.

Methodology: We build on the approaches developed by Peragine (2004, 2005) and Lefranc et al. (2006a, 2006b) and focus on the equality of educational opportunities for individuals of different social background. We propose different definitions of equality of opportunity in education. Then, we provide testable conditions with the aim of (i) testing for the existence of equality of opportunity (EOp) in a given distribution and (ii) ranking distributions on the basis of EOp. Definitions and conditions resort to standard stochastic conditions that are tested by using nonparametric tests developed by Beach and Davidson (1983) and Davidson and Duclos (2000).

Findings: Our empirical results show a strong family effect on the performances of students in the higher education and on the transition of graduates in the labor market. Moreover the inequality of opportunity turns out to be more severe in the South than in the regions of the North-Center.

Originality: This work contributes to the literature in three ways: first, it proposes a definition of equality of educational opportunities. Second, the paper develops a methodology in order to test for the existence of equality of opportunity in a given distribution and to rank distributions according to equality of opportunity. Third, we present empirical evidence on the degree of equality of educational opportunity in the Italian university system.

Details

Inequality and Opportunity: Papers from the Second ECINEQ Society Meeting
Type: Book
ISBN: 978-1-84855-135-0

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