Amita Majumder

INEQUALITY, POLARISATION AND WELFARE: THEORY AND APPLICATIONS

In this paper we explore the possibility of using the Atkinson (1970) – Kolm (1969) – Sen (1973) general ethical index in polarisation measurement. It is shown that though inequality and polarisation are two dissimilar concepts, different indices of inequality may be used to generate alternative indices of polarisation. A numerical illustration based on Indian household expenditure survey data is provided using several polarisation indices.

A Treatment of Absolute Indices of Polarization

Absolute polarization indices remain unchanged under equal absolute augmentation in all incomes. This paper identifies the class of absolute polarization indices whose orderings of alternative income distributions agree with the rankings generated by nonintersecting absolute polarization curves. We explore the possibility of using the Kolm (1976)–Blackorby‐Donaldson (1980) ethical absolute inequality index in polarization measurement. We establish that although inequality and polarization are dissimilar concepts, different absolute inequality indices can be employed to design alternative absolute polarization indices. A numerical illustration is provided using Indian data and it is shown that inequality and polarization are different issues in income distribution analysis. (This abstract was borrowed from another version of this item.)

Calculating Rural-Urban Food Price Differentials from Unit Values in Household Expenditure Surveys: A Comparison with Existing Methods and A New Procedure

While purchasing power parity (PPP) between countries has received a great deal of attention, PPP calculations within countries have received less attention. The idea that one unit of currency has the same purchasing power in all regions in large countries is false. This paper addresses this limitation by proposing a methodology for calculating rural-urban PPP in India. The paper introduces a concept of item-specific PPP that exploits the analogy with an item-specific equivalence scale. The methodology relies on demographically-varying preferences to estimate PPP. The results underline the need to incorporate spatial differences in PPP calculations in countries with heterogeneous preferences. Copyright 2012, Oxford University Press.

ESTIMATING SPATIAL CONSUMER PRICE INDICES THROUGH ENGEL CURVE ANALYSIS

In this paper we propose a method of estimating spatial multilateral price index numbers from cross-section consumer expenditure data on different items using Engel curve analysis. The novelty of the procedure is that it overcomes the problem of data inadequacy, a problem that is shared by most of the developing countries. The procedure does not require item-specific price/unit value data and price index numbers can be calculated from consumer expenditure data grouped by per capita income/total consumer expenditure class in a situation where unit level data are not available. To illustrate the method, we use published state-specific data of the 50th round (1993-94) and 55th round (1999-2000) consumer expenditure surveys of Indias National Sample Survey Organization (NSSO) and calculate the spatial consumer price index numbers for 15 major states of India, with All-India taken as base, separately for the rural and the urban sector for each round.

Measuring Human Poverty: A Generalized Index and an Application Using Basic Dimensions of Life and Some Anthropometric Indicators

The Human Poverty Index (HPI) is a composite index of poverty that focuses on deprivations in human lives, aimed at measuring poverty as a failure in capabilities in multiple dimensions, in contrast to the conventional headcount measure focused on low incomes. The HPI was introduced in the United Nations Development Programme Human Development Report 1997 and concentrates on deprivations in basic dimensions of life. This paper develops an axiomatic characterization of a family of global deprivation indices using an arbitrary number of dimensions of human life. When we consider only the three basic dimensions, a member of this family becomes ordinally equivalent to HPI. The general index allows the calculation of percentage contributions of deprivations in different dimensions, and hence to identify the dimensions whose failures affect the overall deprivation more. This is important from a policy perspective. We also provide an empirical illustration of the characterized indices using cross‐country data for the three basic dimensions and the anthropometric indicators birth weight, height for age and nourishment.

Millennium Development Goals: Measuring Progress towards their Achievement

The Millennium Development Goals are time‐bound quantified targets for improving the human condition from different perspectives. Within each Goal several targets have been set, and to each target there corresponds one or more indicators. For each indicator we axiomatically characterize an index of perceived progress towards reaching the Goals such that it can be used for monitoring progress. We also present a composite index of progress, which allows the calculation of percentage contributions of progress made in different dimensions. This, in turn, enables us to identify the dimensions for which more progress is required, which is important from a policy perspective. We also provide an empirical illustration of the proposed indices using cross‐country data for different indicators.

Achievement and improvement in living standards

Abstract Kakwani (1993) suggested some postulates for an index of improvement in the level of living of a population. He also suggested a particular class of improvement indices. In this paper we characterize axiomatically the entire Kakwani class of indices. We also derive a sufficient condition to avoid a non-comparability problem pointed out by Kakwani.

SPATIAL COMPARISONS OF PRICES AND EXPENDITURE IN A HETEROGENEOUS COUNTRY: METHODOLOGY WITH APPLICATION TO INDIA

This study addresses two significant limitations in the literature on cross-country expenditure comparisons: (a) treatment of all countries, large and small, as single entities with no spatial differences inside the countries, and (b) use of Divisia price indices, rather than preference based “exact price” indices, in the expenditure comparisons. This paper proposes alternative preference consistent methods for estimating spatial price differences in a large heterogeneous country such as India. Unlike the conventional price indices, the use of demand systems based methods allows the incorporation of price induced substitution effects between items. The paper illustrates the usefulness of the methodology by using the “exact” spatial price indices, in conjunction with the inequality sensitive welfare measure due to Sen, to rank the Indian states and examine changes in ranking duirng one of the most significant periods in independent India. The results have methodological and empirical implications that extend much beyond India.

A note on optimal commodity taxation in India

Abstract Optimal commodity tax rates are calculated and their redistributive impact is studied in the Indian context using a new PIGLOG demand system introduced in Coondoo and Majumder (1987). The results are compared with those obtained by Ray (1986) on the same data using LES and RNLPS.

A System of Demand Equations Based on Price Independent Generalized Linearity

This paper proposes a static demand system of the Price Independent Generalized Linearity (PIGL) class of J. Muellbauer. The primary motivation for this is to use the plausible nonlinear income responses displayed by the PIGL in empirical analysis. The performance of the proposed system is compared empirically with those of the Almost Ideal Demand Sy stem and a modification of the simple Nonadditive model of A. S. Deaton. The results bring out the in-adequacies of the PIGL specifications in capturing fully the nonlinearity of income responses implicit in the repeated cross-sectional Ind ian consumption data used in the empirical work. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.