Multidimensional inequality comparisons: A compensation perspective

Christophe Muller and Alain Trannoy

Journal of Economic Theory, 2012, vol. 147, issue 4, 1427-1449

Abstract: We provide a unified treatment of the two approaches pioneered by Atkinson and Bourguignon (1982, 1987) [3,4] by resorting to compensation principles in the bivariate case. We treat the attributes of individual utility asymmetrically by assuming that one attribute can be used to compensate another. Our main result consists of two sufficient second-order stochastic dominance conditions. In the case where the compensated variable has a discrete distribution, the distribution of the compensating variable must satisfy a condition which degenerates to the Sequential Generalized Lorenz test for identical marginal distributions of the compensated variable. Furthermore, the distributions of the compensated variable must satisfy the Generalized Lorenz test.

Keywords: Multidimensional welfare; Compensation; Dominance; Lorenz criterion (search for similar items in EconPapers)
JEL-codes: D3 D63 I31 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:147:y:2012:i:4:p:1427-1449

DOI: 10.1016/j.jet.2011.09.002

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