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Lorenz Non-Consistent Welfare and Inequality Measurement

Alain Chateauneuf () and Patrick Moyes ()

No 406, IDEP Working Papers from Institut d'economie publique (IDEP), Marseille, France

Abstract: inequality decreases and welfare increases as a result of a progressive transfer. We explore the implications for welfare and inequality measurement of substituting the weaker absolute differentials and deprivation quasi-orderings for the Lorenz quasi-ordering. Restricting attention to distributions of equal means, we show that the utilitarian model {the so-called expected utility model in the theory of risk {does not permit one to make a distinction between the views embedded in the differentials, deprivation and Lorenz quasi-orderings. In contrast it is possible within the dual model of M. Yaari (Econometrica 55 (1987), 99{115) to derive the restrictions to be placed on the weighting function which guarantee that the corresponding welfare orderings are consistent with the differentials and deprivation quasi-orderings respectively. Finally we drop the equal mean condition and indicate the implications of our approach for the absolute ethical inequality indices.

Keywords: Income Differentials; Deprivation; Lorenz Dominance; Expected Utility; Dual model of choice under risk; Generalized. Gini social welfare functions. (search for similar items in EconPapers)
JEL-codes: D31 D63 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-05, Revised 2004-05
New Economics Papers: this item is included in nep-mic
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Related works:
Journal Article: Lorenz non-consistent welfare and inequality measurement (2005) Downloads
Journal Article: Lorenz non-consistent welfare and inequality measurement (2004) Downloads
Working Paper: Lorenz non-consistent welfare and inequality measurement (2004)
Working Paper: Lorenz non-consistent welfare and inequality measurement (2004)
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