Preference reversals with social distances

Preference reversals between choice and valuation are typically studied with probabilities or with time delays. I extend them to social distances and document their existence in this new domain.     

Characterizations of Lorenz curves and income distributions

The purpose of this paper is to propose and justify the use of a few measures of inequality for summarizing the basic information provided by the Lorenz curve. By exploiting the fact that the Lorenz curve can be considered analogous to a cumulative distribution function it is demonstrated that the moments of the Lorenz curve generate a convenient family of inequality measures, called the Lorenz family of inequality measures. In particular, the first few moments, which often capture the essential features of a distribution function, are proposed as the primary quantities for summarizing the information content of the Lorenz curve. Employed together these measures, which include the Gini coefficient, also provide essential information on the shape of the income distribution. Relying on the principle of diminishing transfers it is shown that the Lorenz measures, as opposed to the Atkinson measures, have transfer-sensitivity properties that depend on the shape of the income distribution. Received: 20 July 1998/Accepted: 10 September 1999     

Using equivalent income of equivalent adults to rank income distributions

The paper proposes the consistent and rigorous use of equivalence scales for households of different size. Equivalence scales are employed for deriving the income of an equivalent adult representing the household and for weighting the different household types. The proceeding takes into account the possibilities and the needs of different household types at the same time and seems to be adequate if income distributions are to be compared in terms of social welfare or inequality. The approach allows to define and to investigate the usual concepts (Lorenz curve, Lorenz dominance, social welfare function, progressive transfers etc.) for heterogeneous populations. They can be interpreted in an obvious way, and the results, well known for homogeneous populations, can be generalized. Furthermore, some unpleasant and unsatisfactory paradoxa or impossibility results, which can be found in the literature, vanish in the framework considered. Received: 7 March 1997/Accepted: 4 November 1997     

Inequality and welfare evaluation of heterogeneous income distributions

This paper establishes the principles that should govern the welfare and inequality analysis of heterogeneous income distributions. Two basic criteria – the equity preference condition and the compensation principle – are shown to be fundamentally incompatible. The paper favours the latter, thereby vindicating the traditional method of dealing with heterogeneous samples. However, inequality and welfare comparisons will usually be well defined only if equivalent incomes are obtained using constant scale factors; and researchers will need to distinguish clearly between inequality of nominal incomes and inequality of living standards. Furthermore, household observations must always be weighted according to family size.     

Bivariate income distributions with lognormal conditionals

In this paper, the most general bivariate distribution with lognormal conditionals is fully characterized, using the methodology proposed by [3]. The properties of the new family are studied in detail, including marginal and conditional distributions, regression functions, dependence measures, moments and inequality measures. The new distribution is very broad, and contains as a particular case the classical bivariate lognormal distribution. Several subfamilies are studied and a generalization of the basic model is discussed. Finally, we present an empirical application. We estimate and compare the basic model proposed in the paper with a classical model, using data from the European Community Household Panel in different periods of time.     

Simple adjustments of observed distributions for missing income and missing people

Correcting household survey distribution data for missing income or for undersampling may give an idea of the extent of possible biases in measuring inequality, especially when there are reasons to expect the missing income and people to belong to the top of the distribution. There are simple ways to do so when only an aggregate estimate of how much is missing is available. Atkinson had provided a formula to correct the Gini coefficient for the missing income, which was later generalized by Alvaredo (Econ. Lett. 110(3), 274–277 2011). This paper concentrates on the whole distribution and explores various alternative adjustment methods based on three key parameters: how much income, how many people are missing and on what range of income the correction should bear.     

A characterization of income distributions in terms of generalized Gini coefficients

Most commonly used parametric models for the size distribution of incomes possess only a few finite moments, and hence cannot be characterized by the sequence of their moments. However, all income distributions with a finite mean can be characterized by the sequence of first moments of the order statistics. This is an attractive feature since the generalized Gini coefficients of Kakwani (1980), Donaldson and Weymark (1980, 1983) and Yitzhaki (1983) are simple functions of expectations of sample minima. We present results which streamline these characterizations motivated by Aaberge (2000). Received: 8 March 2001/Accepted: 31 July 2001     

Social capital and household income distributions in the United States: 1980, 1990

This paper asked if changes in social capital influence the level and disparity of household income in the United States. Social capital is defined in this paper as one's sympathy (antipathy) for others and one's idealized self. Changes in social capital are expected to produce the following economic consequences. First, increases in social capital are expected to alter the terms of trade and to increase the likelihood of trades between friends and family. Second, increases in social capital are expected to increase an economic agent's concerns for the external consequences of his or her choices, internalizing what otherwise would be considered externalities. Third, increases in social capital between firms are expected to increase the likelihood that they will act in their collective interest. Fourth, increases in social capital are expected to increase the opportunities for specialization and the likelihood of trade. Finally, increases in social capital are expected to raise the average level of income and reduce the disparity of income.This paper empirically tested the relationship between changes in social capital indicator variables and changes in the average and coefficient of variation (CVs) of household income. State CVs and averages of household income were calculated for all 50 states and for different races/ethnic groups using the U.S. Census data for 1980 and 1990. Social capital indicator variables selected to measure changes in social capital included measures of family integrity including the percentages of households headed by a single female with children; educational achievement variables including high school graduation rates; crime rate variables including litigation rates; and labor force participation rates. The social capital indicator variables appeared to be significantly correlated with each other. However, in 1980, the percentages of households headed by a single female with children was not significantly related to the birth rates of single teens. By 1990, however, a strong correlation was found between the percentages of households headed by a single female with children and the birth rate of single teens.Income inequality among U.S. households measured using CVs increased between 1980 and 1990 in all 50 states. The largest increase in CVs was among white households. The smallest increase in CVs was among Asian households. The states with the largest increase in the ratio of 1990 and 1980 CVs were Arizona, Wyoming, Maine, Vermont, and Texas. Half of the states reported decreases in real household income between 1980 and 1990. Those states with the largest percentage decrease in real income were Wyoming, Alaska, Montana, Louisiana, and West Virginia. The largest percentage increase in real income was reported by Connecticut, New Jersey, Rhode Island, and Massachusetts.State CVs and averages of household income were regressed on four factors or subsets of social capital indicator variables. The four factors used to predict CVs and averages of household income were generally statistically significant. The findings of this report support the conclusion that changes in social capital have a significant effect on the disparity and level of household income.     

Social welfare rankings of income distributions A new parametric concept of intermediate inequality

This paper installs a new concept of intermediate inequality, which we refer to as η-inequality equivalence, in the notable form of equivalence of the Lorenz partial ordering and social welfare dominance. The η-inequality equivalence is a parameterized generalization of Krtscha’s (1994) non-linear compromise between the relative and absolute inequality views. For each η ∈ [0,1], we place a class of social evaluation functions satisfying the S-concavity as well as the property that an increase in incomes while leaving η-inequality intact raises welfare. We prove that one income distribution dominates another for all social evaluation functions in iff the former has a higher mean and a higher η-Lorenz curve. We prove also that the class is strictly increasing in the sense of inclusion as η decreases.I am grateful to Kiyoshi Kuga for his helpful comments and suggestions. I am also grateful to an anonymous referee and an associate editor for many valuable comments and suggestions that have much improved the paper. A previous version of this paper was presented at the annual meeting of the Japanese Economic Association, October 7, 2001, Tokyo, Japan. I wish to thank Takashi Toyoda for his helpful comments and suggestions at the meeting. This research was supported in part by the Ministry of Education, Culture, Sports, Science and Technology in Japan (Grant-in-aid for Scientific Research No.12630032).     

Beyond Oaxaca–Blinder: Accounting for differences in household income distributions

This paper develops a method to decompose differences across distributions of household income, based on counterfactual distributions that ‘lie between’ the actually observed distributions. Our approach decomposes differences between any two income distributions (or functionals such as inequality or poverty measures) into shares due to price effects; occupational structure effects; and endowment effects. Comparing the household income distributions of the USA and Brazil in 1999, we find that most of Brazil’s excess inequality (of 13 Gini points) is accounted for by underlying inequalities in the distributions of education and of non-labor income, notably pensions (between four and six Gini points each). Steeper returns to education in Brazil also make an important contribution (of two to five points). Differences in occupational structure and in racial and demographic composition are much less important. An erratum to this article can be found at     

Welfare rankings of income distributions: A rôle for the variance and some insights for tax reform

When generalized Lorenz curves cross, it is not possible to rank the underlying income distributions by the unanimous preference of all additively separable symmetric inequality-averse social welfare functions. But in many cases, unanimous preference results in terms of inequality-aversion are nevertheless available. When generalized Lorenz curves cross once, variance is decisive in determining a robust welfare ranking, and can provide a rationale for choosing equity over efficiency where these two desiderata conflict. Welfare recommendations for certain types of income tax reform are implied, including cases of yield-increasing redistribution.This paper has benefitted considerably from the perceptive comments of an anonymous referee. Valentino Dardanoni gratefully acknowledges financial assistance from the Banco di Sicilia and the Ente Luigi Einaudi of Rome.     

Real household income and attitude toward immigrants: an empirical analysis

Previous studies have analyzed the (aggregate) effects of unemployment on attitudes towards immigrants and on right-wing crimes. In this paper, we investigate the effects of economic prosperity on attitudes towards immigrants, focusing not only on unemployment status but also on real household income. Using panel data from the German Socioeconomic Panel on around 33,000 individuals over the period 1992–2004 we find a robust negative relationship between real personal household income and self-declared concern about immigrants, both in levels and first differences. Both job loss and income reduction concerns about immigration. Our findings document an interesting interaction between economic variables and social attitudes which does not depend on economic growth per se but on its capacity to generate higher economic wellbeing at individual level, not only for unemployed people but also for those in employment, who may face a fall in real income during economic downturns.     

Racial differences in retirement income: the roles of public and private income sources

Despite great overall improvement in the elderly's economic status over the past two decades, minority elders still comprise the poorest population group of all. Nonetheless, the income security of minority elders has not been given special attention in the scrutiny in recent years of the size and the future of various federal programs affecting older persons. Based on data from the 1971, 1981, and 1991 public-use data tapes of the Current Population Survey, the racial difference in income status of the elderly and the role of Social Security and Supplemental Security income versus that of income from private sources are analyzed in terms of how income inequality among races is ameliorated or escalated. The findings show that racial/ethnic differences in income status increased between 1970 and 1990. The findings also confirm that, for both elderly singles and couples, Social Security is the most important income source. Without it, poverty rates among elderly black couples, for example, would have increased by as much as 48.5 percentage points in 1990. Policies that would help improve the income status of the low-income elderly are discussed.     

Survey nonresponse and the distribution of income

The paper examines the distributional implications of selective compliance in sample surveys, whereby households with different incomes are not equally likely to participate. Poverty and inequality measurement implications are discussed for monotonically decreasing and inverted-U compliance-income relationships. We demonstrate that the latent income effect on the probability of compliance can be estimated from information on response rates across geographic areas. On implementing the method on the Current Population Survey for the U.S. we find that the compliance probability falls monotonically as income rises. Correcting for nonresponse appreciably increases mean income and inequality, but has only a small impact on poverty incidence up to poverty lines common in the U.S. Martin Ravallion: Corresponding author.     

Watershed-scale analysis of pollutant distributions in stormwater management ponds

Stormwater management ponds have become a common Best Management Practice in urban and suburban landscapes. Stormwater management ponds are designed to hold runoff from impervious surfaces and allow the settling of sediments and associated pollutants. Various semi-aquatic and aquatic wildlife species have been documented using stormwater management ponds as habitat, but these wetland-like systems are not managed to adhere to freshwater habitat pollutant guidelines. To address the potential for pollutant exposure for wildlife, we used a random sample of 68 stormwater ponds and estimated the proportion of ponds in a third-order watershed that exceed toxicity guidelines for trace metals and polycyclic aromatic hydrocarbons in sediments and chloride in surface waters. Ninety-six percent of ponds exceeded consensus-based threshold effect concentrations for at least one trace metal. Concentrations of at least one of the PAHs measured exceeded the threshold effects concentration in 63% of the ponds. Nine percent of ponds exceeded chronic toxicity levels of chloride on all sampling dates, and 21% exceeded acute toxicity concentrations on at least one sampling date. More studies are needed to evaluate toxic effects of pollutants in stormwater management ponds and the potential for interactive effects of pollutants on wildlife.     

Preference,topology and measure

A symmetric difference metric topology on the collection of binary relations on a countably infinite set provides a new setting for the study of properties of preferences and, as an illustration, is used to lend credence and meaning to some simple intuitions about properties of binary relations. A finite measure on a \(\sigma \) -algebra over the same collection of binary relations is used to provide support for the topological results.