Adopting income groups' weights in multidimensional inequality measures; Empirical case of Indonesia

Suska

Discussion Papers from Department of Economics, University of York

Abstract: The existing literature on multidimensional inequality do not explicitly include weights of each dimension for different groups such as income groups. It is important to distinguish the value of each dimension for each income group in order to reflect the different preferences which are believed to increase welfare. This paper incorporates dimensional weights based on income groups into multidimensional inequality measures. Using ordered probit model of subjective well-being for weights estimation, the results applied on Gini coefficient of well-being, Maasoumi's multidimensional inequality measure and Multidimensional Gini index of Decancq and Lugo to estimate multidimensional inequality with Indonesia data. The results show applying dimensional weights based on income groups affect multidimensional inequality estimation differently depends on degree of substitution used in the estimation.

Keywords: multidimensional inequality; subjective well-being; ordered probit model (search for similar items in EconPapers)
JEL-codes: D31 D63 O15 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-sea
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