# What do normative indices of multidimensional inequality really measure?

*Kristof Bosmans*,
*Koen Decancq* () and
*Erwin Ooghe*

*Journal of Public Economics*, 2015, vol. 130, issue C, 94-104

**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.

**Keywords:** Multidimensional inequality; Equity; Efficiency; Uniform majorization; Correlation increasing majorization (search for similar items in EconPapers)

**JEL-codes:** D31 D63 I31 (search for similar items in EconPapers)

**Date:** 2015

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Working Paper: What do normative indices of multidimensional inequality really measure? (2015)

Working Paper: What do normative indices of multidimensional inequality really measure? (2013)

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**Persistent link:** https://EconPapers.repec.org/RePEc:eee:pubeco:v:130:y:2015:i:c:p:94-104

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