 Income inequality measurement: a fresh look at two old issuesPost-Print from HAL Abstract: The literature on income inequality measurement is split into (1) the ethical approach, from which the Atkinson–Kolm–Sen and Kolm–Pollak classes of indices are derived, and (2) the axiomatic approach, which mainly leads to the generalised entropies. This paper shows how to rationalise, under utilitarianism, the generalised entropies as ethical indices. In this framework a generalised entropy index is consistent with the principle of transfers if and only if the underlying utility function is increasing. This unconventional interpretation explains the strange behaviour of the generalised entropies for some values of the inequality aversion parameter, as identified by Shorrocks (Econometrica 48:613–625, 1980). In that case, the underlying utility function is convex. Then, it provides a solution to escape the so-called Hansson–Sen paradox (Hansson in Foundational problems in the special sciences. Reidel Publishing Company, Dordrecht, 1977; Sen in Personal income distribution. North-Holland, Amsterdam, pp 81–94, 1978) that affects the standard ethical indices and which corresponds to a counterintuitive increase in inequality as a result of a concave transformation of the utility function. A normalised version of the generalised entropies behaves appropriately after such a transformation. Date: 2018 Published in Social Choice and Welfare, 2018, 51 (3), pp.415-435. ⟨10.1007/s00355-018-1121-9⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01802703 DOI: 10.1007/s00355-018-1121-9 Access Statistics for this paper More papers in Post-Print from HAL |
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