What do we mean by inequality comparisons? If the rich just get richer and the poor get poorer, the answer might seem easy. But what if the income distribution changes in a complicated way? Can we ...use mathematical or statistical techniques to simplify the comparison problem in a way that has economic meaning? What does it mean to measure inequality? Is it similar to National Income? Or price index? Is it enough just to work out the Gini coefficient? This book tackles these questions and examines the underlying principles of inequality measurement and its relation to welfare economics, distributional analysis, and information theory. The book covers modern theoretical developments in inequality analysis, as well as showing how the way we think about inequality today has been shaped by classic contributions in economics and related disciplines. Formal results and detailed literature discussion are provided in two appendices. The principal points are illustrated in the main text, using examples from US and UK data, as well as other data sources, and associated web materials provide hands-on learning.
Inequality with Ordinal Data Cowell, Frank A.; Flachaire, Emmanuel
Economica (London),
April 2017, Letnik:
84, Številka:
334
Journal Article
Recenzirano
The standard theory of inequality measurement assumes that the equalisand is a cardinal quantity, with known cardinalization. However, one often needs to make inequality comparisons where either the ...cardinalization is unknown or the underlying data are categorical. We propose an alternative approach to inequality analysis that is rigorous, has a natural interpretation, and embeds both the ordinal data problem and the well-known cardinal data problem. We show how the approach can be applied to the inequality of happiness and of health status.
To compare income and wealth distributions and to assess the effects of policy that affect those distributions require reliable inequality‐measurement tools. However, commonly used inequality ...measures such as the Gini coefficient have an apparently counter‐intuitive property: income growth among the rich may actually reduce measured inequality. We show that there are just two inequality measures that both avoid this anomalous behavior and satisfy the principle of transfers. We further show that the recent increases in US income inequality are understated by the conventional Gini coefficient and explain why a simple alternative inequality measure should be preferred in practice.
We study individual aversion to health and income inequality in three European countries (the United Kingdom, Germany, and Italy), its determinants and especially, the effects of exposure to three ...types of COVID-19 specific shocks affecting individuals’ employment status, their income and health. Next, using evidence of representative samples of the population in the UK, we compare levels of health- and income-inequality aversion in the UK between the years 2016 and 2020. We document evidence of a significant increase in inequality aversion in both income and health domains. However, we show that inequality aversion is higher in the income domain than in the health domain. Furthermore, we find that inequality aversion in both domains increases in age and education and decreases in income and risk appetite. However, people directly exposed to major health shocks during the COVID-19 pandemic generally exhibited lower levels of aversion to both income and health inequality. Finally, we show that inequality aversion was significantly higher among those exposed to higher risk of COVID-19 mortality who experienced major health shocks during the pandemic.
We examine the statistical performance of inequality indices in the presence of extreme values in the data and show that these indices are very sensitive to the properties of the income distribution. ...Estimation and inference can be dramatically affected, especially when the tail of the income distribution is heavy, even when standard bootstrap methods are employed. However, use of appropriate semiparametric methods for modelling the upper tail can greatly improve the performance of even those inequality indices that are normally considered particularly sensitive to extreme values.
WEALTH INEQUALITY: A SURVEY Cowell, Frank A.; Van Kerm, Philippe
Journal of economic surveys,
September 2015, Letnik:
29, Številka:
4
Journal Article
Recenzirano
We survey the issues involved in comparing wealth distributions and measuring wealth inequality with illustrations from the Eurosystem Household Finance and Consumption Survey.
Approaches to measuring health inequalities are often problematic because they use methods that are inappropriate for categorical data. In this paper we focus on “pure” or univariate health ...inequality (rather than income-related or bivariate health inequality) and use a concept of individual status that allows a consistent treatment of such data. We take alternative versions of the status concept and apply methods for treating categorical data to examine self-assessed health inequality for the countries included in the World Health Survey. We also use regression analysis on the apparent determinants of these health inequality estimates. We show that the status concept that is used will affect health-inequality rankings across countries and the way health inequality is related to countries’ median health, income, demographics and governance.
Social identity has become accepted as a key concept underpinning the endogeneity of economic behaviour and preferences. It is important in explaining attitudes towards redistribution and pro‐social ...behaviour. We examine how economic theory measures social identity and its effects on preferences towards redistribution, social solidarity and redistributive institutions. Empirical evidence indicates that social identity carries weight in explaining the presence of social preferences and attitudes towards redistributive institutions.
The association of insurance expansions and the distribution of health status is still a matter we know little about. This paper draws upon new measures of pure (univariate) inequality and mobility ...which accommodate categorical data to understand how an expansion of public insurance may be related to both health inequality and mobility. These measures require a definition of individual's status that is either “downward looking” or “upward looking”. Using data from the Mexican Family Life Survey, a nationally representative longitudinal survey, we find that the distribution of health has worsened in Mexico between 2002 and 2009, although the change is only consistent for an upward looking definition status. Together with the lack of mobility in self‐reported health, we can thus conclude that Mexico has become more rigid over time despite the rapid public health expansion that took place over the 2000s decade. While further research on the potential drivers of health inequalities is needed, our findings suggest that insurance coverage alone may be not enough to reduce health disparities and promote health mobility. Indeed, health inequality and mobility likely depend on a myriad of factors beyond health care.
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