IDEAS home Printed from https://ideas.repec.org/p/leu/wpaper/98.html
   My bibliography  Save this paper

Multidimensional Polarization of Income and Wealth: The Extent and Intensity of Poverty and Affluence

Author

Listed:
  • Bettina Scherg

    (LEUPHANA University Lüneburg,Department of Economic, Behaviour and Law Sciences, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)))

Abstract

Income and wealth are important determinants of individual economic well-being because they are a fundamental resource for consumption. Due to increasing inequality the distribution of income and wealth has moved more and more into the focus of scientific and political attention. The aim of this paper is to determine the extent and the intensity of multidimensional polarization of both income and wealth. Individual well-being is modeled by a well-being function directly affected by income and wealth. In order to have a flexible functional form for the well-being function the translog function is chosen. The parameters of the well-being function are not chosen arbitrarily but determined by the German population. From the perspective of an interdependent relation of the polarization dimensions income and wealth, the extent of multidimensional poverty and affluence is represented by the number of people who are assigned to be multidimensionally poor or affluent. The polarization intensity is measured by the multidimensional mean minimum polarization gap (2DGAP). This polarization intensity measure provides a transparent representation of each singular attribute and account for their possible interdependent relations. The data basis for the empirical investigation is the SAVE study from 2010 for Germany.

Suggested Citation

  • Bettina Scherg, 2014. "Multidimensional Polarization of Income and Wealth: The Extent and Intensity of Poverty and Affluence," FFB-Discussionpaper 98, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    • Handle: RePEc:leu:wpaper:98
    as

    Download full text from publisher

    File URL: http://www.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ffb/files/publikationen/diskussion/DP_98_-_Multidimensional_Polarization_of_Income_and_Wealth.pdf
    File Function: First version, 2014
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Joachim Merz & Tim Rathjen, 2011. "Intensity of Time and Income Interdependent Multidimensional Poverty: Well-Being and Minimum 2DGAP ; German Evidence," SOEPpapers on Multidisciplinary Panel Data Research 411, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Sen, Amartya, 2001. "Development as Freedom," OUP Catalogue, Oxford University Press, number 9780192893307.
    3. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-141, May.
    4. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    5. Albert O. Hirschman & Michael Rothschild, 1973. "The Changing Tolerance for Income Inequality in the Course of Economic DevelopmentWith A Mathematical Appendix," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(4), pages 544-566.
    6. Joachim Merz & Tim Rathjen, 2010. "Sind Selbständige zeit- und einkommensarm? Eine Mikroanalyse der Dynamik interdependenter multidimensionaler Armut mit dem Sozio-ökonomischen Panel und den deutschen Zeitbudgeterhebungen," FFB-Discussionpaper 82, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    7. Joachim Merz & Bettina Scherg, 2014. "Polarization of Time and Income – A Multidimensional Analysis for Germany," Research on Economic Inequality, in: Economic Well-Being and Inequality: Papers from the Fifth ECINEQ Meeting, volume 22, pages 273-321, Emerald Group Publishing Limited.
    8. Sacks, Daniel W. & Stevenson, Betsey & Wolfers, Justin, 2012. "The New Stylized Facts about Income and Subjective Well-Being," IZA Discussion Papers 7105, Institute of Labor Economics (IZA).
    9. Joachim Merz & Henning Stolze, 2010. "Cumulation of Cross-Section Surveys - Evaluation of Alternative Concepts for the Cumulated Continuous Household Budget Surveys (LWR) 1999 until 2003 compared to the Sample Survey of Income and Expendi," FFB-Discussionpaper 84, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    10. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-358, May.
    11. Joachim Merz, 1992. "Time Use Dynamics in Paid Work and Household Activities of Married Women - A Panel Analysis with Household Information and Regional Labour Demand," FFB-Discussionpaper 02, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    12. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    13. Eva Österbacka & Joachim Merz & Cathleen D. Zick, 2012. "Human capital investments in children –A comparative analysis of the role of parent-child shared time in selected countries," electronic International Journal of Time Use Research, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)) and The International Association for Time Use Research (IATUR), vol. 9(1), pages 120-143, November.
    14. Hirschman, Albert O., 1973. "The changing tolerance for income inequality in the course of economic development," World Development, Elsevier, vol. 1(12), pages 29-36, December.
    15. Markus Knell, 1998. "Einkommensungleichheit und Wachstum," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 24(4), pages 443-474.
    16. Joachim Merz, 1993. "Statistik und Freie Berufe im Rahmen einer empirischen Wirtschafts- und Sozialforschung," FFB-Discussionpaper 04, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    17. Markus M. Grabka & Joachim R. Frick, 2008. "Schrumpfende Mittelschicht: Anzeichen einer dauerhaften Polarisierung der verfügbaren Einkommen?," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 75(10), pages 101-108.
    18. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    19. Joachim Merz & Tim Rathjen, 2011. "Zeit- und Einkommensarmut von Freien Berufen und Unternehmern," FFB-Discussionpaper 89, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    20. You‐Qiang Wang & Kai‐Yuen Tsui, 2000. "Polarization Orderings and New Classes of Polarization Indices," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 349-363, July.
    21. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
    22. J.F. Volrad Deneke, 2007. "Freie Berufe-Herausforderungen an die Wissenschaft," FFB-Discussionpaper 71, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    23. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    24. Daniel T. Slesnick, 1998. "Empirical Approaches to the Measurement of Welfare," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 2108-2165, December.
    25. Bettina Scherg, 2014. "Ist die Einkommenspolarisierung gestiegen? - Alternative Messkonzepte und ihre Ergebnisse für Selbständige und abhängig Beschäftigte in Deutschland," FFB-Discussionpaper 97, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    26. Chiara Gigliarano & Karl Mosler, 2009. "Constructing indices of multivariate polarization," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(4), pages 435-460, December.
    27. repec:bla:jpbect:v:2:y:2000:i:3:p:349-63 is not listed on IDEAS
    28. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
    29. Jan Goebel & Martin Gornig & Hartmut Häußermann, 2010. "Polarisierung der Einkommen: die Mittelschicht verliert," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 77(24), pages 2-8.
    30. Joachim Merz & Henning Stolze, 2010. "Kumulation von Querschnitten - Evaluierung alternativer Konzepte für die kumulierten laufenden Wirtschaftsrechnungen 1999 bis 2003 im Vergleich zur Einkommens- und Verbrauchsstichprobe 2003," FFB-Discussionpaper 85, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    31. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
    32. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joachim Merz & Tim Rathjen, 2016. "Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? - The German Case," FFB-Discussionpaper 102, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    2. Joachim Merz, 2015. "Sind Rentner zufriedener? Eine Panelanalyse von Antizipations- und Adaptionseffekten," FFB-Discussionpaper 99, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    3. Mirko Felchner, 2015. "Einkommensdynamik bei Selbständigen als Freie Berufe und abhängig Beschäftigte Eine dynamische Paneldatenschätzung mit Daten des Sozio-oekonomischen Panels," FFB-Discussionpaper 101, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    4. Joachim Merz & Lars Rusch, 2015. "MICSIM-4j - A General Microsimulation Model User Guide (Version 1.1)," FFB-Discussionpaper 100, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iris Burmester & Bettina Scherg, 2013. "Polarisierung von Arbeitseinkommen im internationalen Vergleich – Empirische Befunde," FFB-Discussionpaper 96, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    2. Merz, Joachim & Scherg, Bettina, 2021. "Time, Income and Subjective Well-Being - 20 Years of Interdependent Multidimensional Polarization in Germany," IZA Discussion Papers 14870, Institute of Labor Economics (IZA).
    3. Joachim Merz & Tim Rathjen, 2016. "Entrepreneurs and Freelancers: Are They Time and Income Multidimensional Poor? - The German Case," SOEPpapers on Multidisciplinary Panel Data Research 851, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Joachim Merz & Lars Rusch, 2015. "MICSIM-4j - A General Microsimulation Model User Guide (Version 1.1)," FFB-Discussionpaper 100, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    5. Joachim Merz & Bettina Scherg, 2013. "Polarization of Time and Income: A Multidimensional Approach with Well-Being Gap and Minimum 2DGAP ; German Evidence," SOEPpapers on Multidisciplinary Panel Data Research 574, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Joachim Merz & Tim Rathjen, 2011. "Intensity of Time and Income Interdependent Multidimensional Poverty: Well-Being and Minimum 2DGAP – German Evidence," FFB-Discussionpaper 92, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    7. Joachim Merz & Normen Peters, 2019. "Parental Child Care Time, Income and Subjective Well-Being: A Multidimensional Polarization Approach for Germany," SOEPpapers on Multidisciplinary Panel Data Research 1021, DIW Berlin, The German Socio-Economic Panel (SOEP).
    8. Merz, Joachim & Peters, Normen, 2019. "Parental Child Care Time, Income and Subjective Well-Being: A Multidimensional Polarization Approach for Germany," IZA Discussion Papers 12145, Institute of Labor Economics (IZA).
    9. Diriwaechter, Patric & Shvartsman, Elena, 2018. "The anticipation and adaptation effects of intra- and interpersonal wage changes on job satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 146(C), pages 116-140.
    10. F. Clementi & A. L. Dabalen & V. Molini & F. Schettino, 2017. "When the Centre Cannot Hold: Patterns of Polarization in Nigeria," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 608-632, December.
    11. Abel Brodeur & Sarah Flèche, 2019. "Neighbors' Income, Public Goods, and Well‐Being," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(2), pages 217-238, June.
    12. Joachim Merz, 2015. "Sind Rentner zufriedener? Eine Panelanalyse von Antizipations- und Adaptionseffekten," FFB-Discussionpaper 99, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    13. Fabio Clementi & Vasco Molini & Francesco Schettino & Haider A. Khan & Michele Fabiani, 2023. "Polarization and its discontents: Morocco before and after the Arab Spring," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 105-129, March.
    14. Fluhrer, Svenja & Kraehnert, Kati, 2022. "Sitting in the same boat: Subjective well-being and social comparison after an extreme weather event," Ecological Economics, Elsevier, vol. 195(C).
    15. Senik, Claudia, 2009. "Direct evidence on income comparisons and their welfare effects," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 408-424, October.
    16. Vincenzo Atella & Jay Coggins & Federico Perali, 2005. "Aversion to inequality in Italy and its determinants," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(2), pages 117-144, January.
    17. AndrewE. Clark & Claudia Senik, 2010. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," Economic Journal, Royal Economic Society, vol. 120(544), pages 573-594, May.
    18. Alpaslan Akay & Gökhan Karabulut & Peter Martinsson, 2013. "The effect of religiosity and religious festivals on positional concerns -- an experimental investigation of Ramadan," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3914-3921, September.
    19. Andrew E. Clark & Claudia Senik, 2010. "Will GDP growth increase happiness in developing countries?," PSE Working Papers halshs-00564985, HAL.
    20. Akay, Alpaslan & Bargain, Olivier B. & Giulietti, Corrado & Robalino, Juan D. & Zimmermann, Klaus F., 2016. "Remittances and relative concerns in rural China," China Economic Review, Elsevier, vol. 37(C), pages 191-207.

    More about this item

    Keywords

    Multidimensional polarization; polarization intensity; income; wealth; poverty; affluence; translog well-being function; Minimum Multidimensional Polarization Gap (2DGAP);
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:leu:wpaper:98. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Merz (email available below). General contact details of provider: https://edirc.repec.org/data/fbluede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.