Inequality and Welfare Evaluation of Heterogeneous Income Distributions

Anthony F. Shorrocks

No RP2004-01, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper establishes the principles which should govern the welfare and inequality analysis of heterogeneous income distributions. Two basic criteria—the 'equity preference' condition and the 'compensation principle'—are shown to be fundamentally incompatible. The paper favours the latter, thereby vindicating the traditional method of dealing with heterogeneous samples.

Keywords: Equality and inequality; Income distribution; Poverty measurement; Methodology (Poverty); Quality of life (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (48)

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