Intersecting Lorenz curves, the degree of downside inequality aversion, and tax reformsCitation formats

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Intersecting Lorenz curves, the degree of downside inequality aversion, and tax reforms. / Chiu, W. Henry.

In: Social Choice and Welfare, Vol. 28, No. 3, 04.2007, p. 375-399.

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Chiu, W. Henry. / Intersecting Lorenz curves, the degree of downside inequality aversion, and tax reforms. In: Social Choice and Welfare. 2007 ; Vol. 28, No. 3. pp. 375-399.

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@article{15c85f292cba49f9b0cd84deefc0ea34,
title = "Intersecting Lorenz curves, the degree of downside inequality aversion, and tax reforms",
abstract = "This paper clarifies the conceptual distinction of downside inequality aversion (or transfer sensitivity) as a normative criterion for judging income distributions from the Pigou-Dalton principle of transfers. We show that when the Lorenz curves of two income distributions intersect, how the change from one distribution to the other is judged by an inequality index exhibiting downside inequality aversion often depends on the relative strengths of its downside inequality aversion and inequality aversion. For additive inequality indices or their monotonic transformations, a measure characterizing the strength of an index's downside inequality aversion against its inequality aversion is shown to determine the ranking by the index of two distributions whose Lorenz curves cross once. The precise condition under which the same result generalizes to the case of multiple-crossing Lorenz curves is also identified. The results are particularly useful in understanding the distributional impact of tax reforms. {\circledC} 2006 Springer-Verlag.",
author = "Chiu, {W. Henry}",
year = "2007",
month = "4",
doi = "10.1007/s00355-006-0170-7",
language = "English",
volume = "28",
pages = "375--399",
journal = "Social Choice and Welfare",
issn = "0176-1714",
publisher = "Springer Nature",
number = "3",

}

RIS

TY - JOUR

T1 - Intersecting Lorenz curves, the degree of downside inequality aversion, and tax reforms

AU - Chiu, W. Henry

PY - 2007/4

Y1 - 2007/4

N2 - This paper clarifies the conceptual distinction of downside inequality aversion (or transfer sensitivity) as a normative criterion for judging income distributions from the Pigou-Dalton principle of transfers. We show that when the Lorenz curves of two income distributions intersect, how the change from one distribution to the other is judged by an inequality index exhibiting downside inequality aversion often depends on the relative strengths of its downside inequality aversion and inequality aversion. For additive inequality indices or their monotonic transformations, a measure characterizing the strength of an index's downside inequality aversion against its inequality aversion is shown to determine the ranking by the index of two distributions whose Lorenz curves cross once. The precise condition under which the same result generalizes to the case of multiple-crossing Lorenz curves is also identified. The results are particularly useful in understanding the distributional impact of tax reforms. © 2006 Springer-Verlag.

AB - This paper clarifies the conceptual distinction of downside inequality aversion (or transfer sensitivity) as a normative criterion for judging income distributions from the Pigou-Dalton principle of transfers. We show that when the Lorenz curves of two income distributions intersect, how the change from one distribution to the other is judged by an inequality index exhibiting downside inequality aversion often depends on the relative strengths of its downside inequality aversion and inequality aversion. For additive inequality indices or their monotonic transformations, a measure characterizing the strength of an index's downside inequality aversion against its inequality aversion is shown to determine the ranking by the index of two distributions whose Lorenz curves cross once. The precise condition under which the same result generalizes to the case of multiple-crossing Lorenz curves is also identified. The results are particularly useful in understanding the distributional impact of tax reforms. © 2006 Springer-Verlag.

U2 - 10.1007/s00355-006-0170-7

DO - 10.1007/s00355-006-0170-7

M3 - Article

VL - 28

SP - 375

EP - 399

JO - Social Choice and Welfare

JF - Social Choice and Welfare

SN - 0176-1714

IS - 3

ER -