Restricted and Unrestricted Dominance Welfare, Inequality and Povery Orderings

Jean-Yves Duclos and Paul Makdissi ()

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: This paper extends the previous literature on the normative links between the measurement of poverty, social welfare and inequality. We show how, when the range of possible poverty lines is unbounded above, a robust ranking of absolute poverty may be interpreted as a robust ranking of social welfare, and a robust ranking of relative poverty may be interpreted as a robust ranking of inequality for any order of stochastic dominance. This interpretation is also valid when the maximum poverty line is bounded and for certain orders of stochastic dominance, so long as social welfare and inequality judgements are “censored''. We also develop new criteria of restricted inequality dominance, and find that they warn against the use of some popular indices of relative poverty and censored inequality. Finally, we illustrate geometrically how the new criteria of restricted inequality dominance extends the ranking power of previously proposed dominance criteria.

Keywords: Welfare; Inequality; Poverty; Stochastic Dominance (search for similar items in EconPapers)
JEL-codes: D63 I32 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://gredi.recherche.usherbrooke.ca/wpapers/00_01.pdf First version, 2000 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:00-01

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