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2013 | OriginalPaper | Buchkapitel

13. Social Welfare, Relative Deprivation, and the Gini Coefficient

verfasst von : Shlomo Yitzhaki, Edna Schechtman

Erschienen in: The Gini Methodology

Verlag: Springer New York

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Abstract

The aim of this chapter is to elaborate on the role of the Gini coefficient in two major competing theories that dominate the theoretical considerations in the area of income distribution. The major theory that dominates the economic thinking with respect to the role of the government in the area of income distribution is the Bergson’s (1938) social welfare function approach (hereafter SWF). The other theory that is gaining acceptability among economists is the theory of relative deprivation (hereafter RD).

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Fußnoten
1
A monopolistic behavior implies that an athlete takes into account that his achievements may affect the scoring system. Note, however, that the arguments raised continue to hold under monopolistic behavior.
 
2
One can complicate the presentation by introducing public goods, leisure, monopolistic behavior, etc. Introducing those issues will complicate the presentation without adding relevant content.
 
3
A well-behaved utility function is defined only over the commodity owned and consumed by the individual, the marginal utilities are positive and declining, and for every set of prices, there is one optimal allocation of commodities that maximizes it.
 
4
Hopkins (2008) surveys the different approaches toward relativity and the implications of the connection between happiness and inequality. Note, however, that the relativity in Runciman’s approach arises because deprivation depends on the reference group, and reference groups among individuals may differ. Would we use the same reference group for the whole population then deprivation ceases to be relative.
 
5
Sen (1976b) describes the assumptions that lead to national income comparisons.
 
6
See Chakravarty and Mukherjee (1999), Bossert and D’Ambrosio (2006), Bossert, D’Ambrosio, and Peragine (2007), and D’Ambrosio and Frick (2007) for different views. Deaton (2) uses the theory to explain differential mortality.
 
7
Hey and Lambert (1980) consider a different interpretation. The individual compares his income to the income of each individual in the society. As far as we can see this is a crucial difference in interpreting the implication of the theory.
 
8
The classification of a society into classes is the corner stone of the Marxist theory but it is rarely done in the measurement of inequality. For a recent example see Wolff and Zacharias (2007b).
 
9
The decomposition is applied to the Gini coefficient only. Although the extended Gini can also represent deprivation and other theories (Ebert & Moyes, 2000; Moyes, 2007), it is not decomposable in the same way as the Gini.
 
10
Nineteenth Century hymn (Mrs. C. F. Alexander) brought to our attention by Susanne Freund.
 
11
To see that note that Gb can be negative while the two terms involving Gbp in (13.24) cancel each other. Gb can be negative if one group includes poor people and a small number of extremely rich people so that the covariance between average rank and average income among groups is negative.
 
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Metadaten
Titel
Social Welfare, Relative Deprivation, and the Gini Coefficient
verfasst von
Shlomo Yitzhaki
Edna Schechtman
Copyright-Jahr
2013
Verlag
Springer New York
DOI
https://doi.org/10.1007/978-1-4614-4720-7_13

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