On the power of poverty orderings

Buhong Zheng ()
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Buhong Zheng: Department of Economics, University of Colorado at Denver, Campus Box 181, P.O. Box 173364, Denver, CO 80217-3364, USA

Social Choice and Welfare, 1999, vol. 16, issue 3, 349-371

Abstract: This paper investigates the possibility of increasing the ordering power of additively separable poverty measures beyond the condition of second degree stochastic dominance by considering third degree stochastic dominance. For a fixed poverty line, the ordering power can be significantly enhanced by using the third degree criterion. For a range of poverty lines, the marginal power of the third degree criterion over the second degree depends critically upon the lower bound of the range; if the lower bound poverty line is arbitrarily close to zero, the two criteria coincide. The implications of a strong version of the transfer sensitivity axiom are also considered.

Date: 1999-05-11
Note: Received: 20 November 1995/Accepted: 16 February 1998
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