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Equivalence Scale Relativities and the Extent of Inequality and Poverty

By Coulter, Fiona A. E.

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Book Id: WPLBN0000217965
Format Type: PDF eBook
File Size: 1.7 MB
Reproduction Date: 2005

Title: Equivalence Scale Relativities and the Extent of Inequality and Poverty  
Author: Coulter, Fiona A. E.
Language: English
Subject: Economics, Finance & business, World Bank.
Collections: Economics Publications Collection
Publication Date:
Publisher: The World Bank


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E. Coulte, F. A. (n.d.). Equivalence Scale Relativities and the Extent of Inequality and Poverty. Retrieved from


There is a mismatch between the results provided by income distribution theory and the demands of empirical measurement practice, and that mismatch concerns the treatment of equity-relevant non-income differences between persons (' needs ', for short). Inequality and poverty measurement theory provides a host of ordinal and cardinal measures of poverty and inequality. This literature assumes, however, that a person's 'income' is the only attribute relevant to distributional comparisons. Differences in needs are either ignored or it is assumed, typically without discussion, that incomes have been made comparable by adjusting them by some equivalence scale. Analysis is then of the distribution of 'equivalent income'. The issue we address in this paper is: how do measures of inequality and poverty defined over equivalent income distributions, and hence conditional on some equivalence scale, change if equivalence scale relativities are changed? The main type of social judgements incorporated in existing indices are those summarised by the concepts of inequality and poverty aversion, and it is well known that higher inequality (poverty) aversion, ceteris paribus, implies higher inequality (poverty). We are motivated by the view that distributional assessments should also take explicit account of social judgements about differences in needs. We are therefore also interested in the impact of differences in these judgements on indices of inequality and poverty, and in how these impacts depend on judgements about inequality and poverty aversion. These issues are important for policy; they are not simply theoretical curiosa. For example, the main income distribution statistics regularly published in the United Kingdom are those of the UK Central Statistical Office and Department of Social Security: see for example CSO (1990) and DSS (I 990). Given their semi-official status and scarcity value, these statistics receive much attention from policy analysts and others, and often form the basis of other secondary analyses. However, all the equivalent income series are based on just...


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