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The Measurement of Welfare Change

Author

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  • Walter Bossert

    (Department of Economics and CIREQ, University of Montreal)

  • Bhaskar Dutta

    (University of Warwick and Ashoka University)

Abstract

We propose a class of measures of welfare change that are based on the generalized Gini social welfare functions. We analyze these measures in the context of a second-order dominance property that is akin to generalized Lorenz dominance as introduced by Shorrocks (1983) and Kakwani (1984). Because we consider welfare differences rather than welfare levels, the requisite equivalence result involves linear welfare functions (that is, those associated with the generalized Ginis) only, as opposed to the entire class of strictly increasing and strictly S-concave welfare indicators. Moving from second-order dominance to ï¬ rst-order dominance does not change this result signiï¬ cantly: for numerous pairs of income distributions, the generalized Ginis remain the only strictly increasing and strictly S-concave measures that are compatible with this ï¬ rst-order dominance condition phrased in terms of welfare change. Our ï¬ nal result provides a characterization of our measures of welfare change in the spirit of Weymark’s (1981) original axiomatization of the generalized Gini welfare measures.

Suggested Citation

  • Walter Bossert & Bhaskar Dutta, 2018. "The Measurement of Welfare Change," Working Papers 01, Ashoka University, Department of Economics.
    • Handle: RePEc:ash:wpaper:01
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    File URL: https://dp.ashoka.edu.in/ash/wpaper/paper1_0.pdf
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    References listed on IDEAS

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    1. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
    2. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-809, July.
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    6. Capeau, Bart & Ooghe, Erwin, 2007. "On comparing heterogeneous populations: Is there really a conflict between welfarism and a concern for greater equality in living standards?," Mathematical Social Sciences, Elsevier, vol. 53(1), pages 1-28, January.
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    9. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
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    Cited by:

    1. Seth, Suman & Yalonetzky, Gaston, 2021. "A mobility decomposition of absolute measures of panel distributional change," Economics Letters, Elsevier, vol. 201(C).
    2. Alekseev, Aleksandr & Sokolov, Mikhail V., 2021. "How to measure the average rate of change?," Mathematical Social Sciences, Elsevier, vol. 113(C), pages 43-59.
    3. Paolo Brunori & Flaviana Palmisano & Vito Peragine, 2022. "Income taxation and equity: new dominance criteria with a microsimulation application," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(3), pages 509-536, September.
    4. Dirk Van de gaer & Flaviana Palmisano, 2018. "Growth, mobility and social welfare," Working Papers 476, ECINEQ, Society for the Study of Economic Inequality.
    5. Van de gaer, Dirk & Palmisano, Flaviana, 2021. "Growth, mobility and social progress," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 164-182.

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    More about this item

    Keywords

    Dominance criteria;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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