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Measuring multidimensional inequality of opportunity

Martyna Kobus (), Marek Kapera () and Vito Peragine ()
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Martyna Kobus: Polish Academy of Sciences
Marek Kapera: Polish Academy of Sciences

No 02-2020, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: This paper develops a normative approach to the measurement of ex-ante inequality of opportunity in a multidimensional setting, i.e., when the individual outcome is represented by a multidimensional variable. We characterize three classes of social welfare functions, all endorsing ex ante compensation but each of them reflecting a specific reward principle: (1) utilitarian, (2) agnostic and (3) averse. The first class is implemented via generalized Lorenz Dominance applied to each attribute separately. The agnostic and inequality averse classes are implemented by a welfarist Lorenz ordering, namely, of type-aggregate utilities. In the case of inequality-averse class, utility functions are submodular, hence capturing the dependence between attributes. We also develop normative inequality indices (Atkinson, 1970; Kolm 1969; Sen, 1973) for the classes of welfare functions and study their properties. Finally, we propose an empirical applications of the methods developed in the paper: by using the National Longitudinal Study of Adolescent to Adult Health (Add Health) we evaluate inequality of opportunity in U.S. for the case of three dimensions of individual outcomes, namely, education, health and income.

Keywords: equality of oppportunity; economic inequality; multidimensional welfare; multidimensional inequality; Lorenz dominance (search for similar items in EconPapers)
JEL-codes: D63 I32 (search for similar items in EconPapers)
Pages: 277
Date: 2020-02, Revised 2020-02
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