What do normative indices of multidimensional inequality really measure?

K.G.M. Bosmans, K. Decancq, E. Ooghe

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Scopus)

Abstract

We argue that normative indices of multidimensional inequality do not only measure a distribution's extent of inequity (i.e., the gaps between the better-off and the worse-off), but also its extent of inefficiency (i.e., the non-realized mutually beneficial exchanges of goods). We provide a decomposition that allows us to quantify these two parts of inequality. Strikingly, the inequity component turns out to be a two-stage measure, that is, a measure that applies a unidimensional inequality measure to the vector of individual well-being levels. The decomposition also clarifies existing controversies surrounding two prominent transfer axioms, viz., uniform majorization and correlation increasing majorization. An application to inequality in human development illustrates the analysis.

Data source: Data downloaded from the UNDP website in December 2012
Original languageEnglish
Pages (from-to)94-104
Number of pages11
JournalJournal of Public Economics
Volume130
DOIs
Publication statusPublished - Oct 2015

Keywords

  • Multidimensional inequality
  • Equity
  • Efficiency
  • Uniform majorization
  • Correlation increasing majorization
  • GINI INDEXES
  • WORLD INEQUALITY
  • DISTRIBUTIONS
  • EVOLUTION
  • US

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