Inequality indices and the starshaped principle of transfers

The evaluation of income distributions is usually based on the Pigou-Dalton (PD) principle which says that a transfer from any people to people who have less decreases economic inequality, i.e., increases the social evaluation index. We introduce two weaker principles of transfers which refer to a parameter θ. With the new principles, only those PD transfers increase the social evaluation index which take from the class of incomes above θ and give to the class below θ. The relative positions of individuals remain unchanged, and either no individual may cross the line θ (principle of transfers about θ) or some may do who have been situated next to it (starshaped principle of transfers at θ). θ may be a given constant, a function of mean income, or a quantile of the income distribution. The classes of indices which are consistent with these transfers are completely characterized, and examples are given.