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Comparing degrees of inequality aversion

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  • Kristof Bosmans

Abstract

We propose a straightforward dominance procedure for comparing social welfare orderings (SWOs) with respect to the degree of inequality aversion they express. We consider three versions of the procedure: (i) a criterion based on the Lorenz quasi-ordering which we argue to be the ideal version, (ii) a criterion based on a minimalist concept of inequality, and (iii) a criterion based on the relative differentials quasi-ordering. It turns out that the traditional Arrow-Pratt approach is equivalent to the latter two criteria for important classes of SWOs, but that it is profoundly inconsistent with the Lorenz-based criterion. With respect to the problem of combining extreme inequality aversion and monotonicity, criteria (ii) and (iii) identify as extremely inequality averse a set of SWOs that includes leximin as a special case, whereas the Lorenz-based criterion concludes that extreme inequality aversion and monotonicity are incompatible.
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  • Kristof Bosmans, 2007. "Comparing degrees of inequality aversion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(3), pages 405-428, October.
    • Handle: RePEc:spr:sochwe:v:29:y:2007:i:3:p:405-428
    DOI: 10.1007/s00355-006-0213-0
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    References listed on IDEAS

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    1. Alain Chateauneuf & Patrick Moyes, 2005. "Lorenz non-consistent welfare and inequality measurement," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(2), pages 61-87, January.
    2. Tungodden, Bertil, 2000. "Egalitarianism: Is Leximin the Only Option?," Economics and Philosophy, Cambridge University Press, vol. 16(2), pages 229-245, October.
    3. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Cited by:

    1. Kristof Bosmans, 2007. "Extreme inequality aversion without separability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 589-594, September.
    2. Alain Babatounde & Bart Capeau & Romain Houssa, 2023. "Welfare effects of indirect tax policies in West Africa," DeFiPP Working Papers 2301, University of Namur, Development Finance and Public Policies.
    3. Antoine Bommier & Stéphane Zuber, 2012. "The Pareto Principle Of Optimal Inequality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(2), pages 593-608, May.
    4. Antoine Bommier & Francois Le Grand, "undated". "A Robust Approach to Risk Aversion," Working Papers ETH-RC-13-002, ETH Zurich, Chair of Systems Design.
    5. Bosmans, Kristof, 2014. "Distribution-sensitivity of rank-dependent poverty measures," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 69-76.
    6. Bart Capéau, 2013. "Size and distribution trade-offs for the leximin ordering," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(2), pages 237-248, June.
    7. Yoram Amiel & Frank Cowell & Wulf Gaertner, 2012. "Distributional orderings: an approach with seven flavors," Theory and Decision, Springer, vol. 73(3), pages 381-399, September.
    8. Kristof Bosmans & Erwin Ooghe, 2013. "A characterization of maximin," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(2), pages 151-156, November.

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    More about this item

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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