A Theory for Ranking Distribution Functions

Rolf Aaberge, Tarjei Havnes and Magne Mogstad

No 20/2014, Memorandum from Oslo University, Department of Economics

Abstract: We propose a general framework to unambiguously compare distributions functions in an economically interpretable way. Our framework provides complete ranking of any set of distributions and money metric interpretation of the social welfare level of a dominating distribution as compared to a dominated distribution. We show the usefulness of our framework using two empirical applications; the first assesses the welfare implications of changes in household income distributions over the business cycle, while the second performs a social welfare comparison of the actual and counterfactual outcome distributions from a policy experiment.

Keywords: distribution functions; stochastic dominance; social welfare; inequality (search for similar items in EconPapers)
JEL-codes: D30 D63 I31 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2014-09-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: A Theory for Ranking Distribution Functions (2013)
Working Paper: A theory for ranking distribution functions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2014_020

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