Camilo Dagum

A New Approach to the Decomposition of the Gini Income Inequality Ratio

The purpose of this research is to introduce a new approach to the decomposition of the Gini ratio into three components, supporting them with economic and statistical rigorous interpretations. The three components are: (i) the Gini inequality within subpopulations; (ii) the net contribution of the extended Gini inequality between subpopulations; and (iii) the contribution of the intensity of transvariation between subpopulations. These components are weighted by the product of the population shares times the income shares of the corresponding subpopulations where the weights add to one. The decomposition introduced in this research is applied to the 1990 U.S. family income distribution. The population of families is disaggregated by types into the following subpopulations: (a) married-couple families; (b) male householder, no wife present; and (c) female householder, no husband present.

On the relationship between income inequality measures and social welfare functions

Abstract The societys aversion to inequality and aversion to poverty principles are introduced as primitive assumptions from which the Pigou-Dalton principle of transfers is deduced. These principles also substantiate the quasiconcavity of the utility function (social welfare gain) and quasiconvexity of the disutility function (social welfare loss) of each economic unit, allowing the partition of this income into (1) social welfare gain and (2) social welfare loss. The resulting analytical framework is used to discuss and analyze the social welfare bases of income inequality and conversely. Four income inequality measures and implied social welfare functions are considered: Theil, generalized entropy, Atkinson, and Gini.

A new method to estimate the level and distribution of household human capital with application

Abstract This study introduces a new approach that enables, for the first time, the estimation of national and personal human capital (HC) in money value. National HC is estimated on the basis of the life cycle mean earned income by age using sample survey data which are smoothed with local linear filters. Personal HC is treated as a dimensionless latent endogenous variable. The estimation of each economic unit HC as a latent variable is benchmarked by the estimation of the average national HC in order to obtain estimates in money value. A model is fitted to study the distribution of personal HC. This new approach is illustrated using data from the U.S. Federal Reserve Board sample survey on income and wealth distributions. The new theoretical developments and empirical results provide the framework to advance socioeconomic policies on issues of endogenous economic growth with economic efficiency and social equity, hence, to deal with the problems of poverty and socially unacceptable inequality. This study is integrated with a discussion and evaluation of alternative methods of HC estimation proposed in the literature, i.e. the prospective, retrospective, and educational stock. It includes a brief comment on the contributions of the Chicago School which specifies an earning income function within the HC conceptual framework, without dealing with HC estimation.

Measuring the Economic Affluence Between Populations of Income Receivers

This article introduces and discusses a new measure of the relative economic affluence (REA) between income distributions with different means. The REA measure D is applied to the U.S. white and black household income distributions of 1967 and 1979. The measure D shows that the REA of the white households with respect to the black households decreased from 1967 to 1979. This conclusion contrasts with those obtained by applications of distance or quasi-distance functions. It is shown in this study that REA measures and distance functions address different and relevant issues. An REA measure deals with the relation “more affluent than” and defines a partial strict ordering over the set of pairs of income distributions—that is, the relation is asymmetric and transitive—whereas a distance function accounts for the dissimilarity between distributions without imposing an ordering relation and hence fulfills the symmetry property.

Generation And Properties Of Income Distribution Functions

The issues of income and wealth distributions and their associated concepts of economic inequality and social welfare recognizes a long and enlightened tradition to which the Code of Hammurabi, the contributions of Aristotle, St. Thomas Aquinas, J.J. Rousseau and several XlXth Century socialists philosophers and economists belong.

Formative Indicators and Effects of a Causal Model for Household Human Capital with Application

Dagum and Slottje (2000) estimated household human capital (HC) as a latent variable (LV) and proposed its monetary estimation by means of an actuarial approach. This paper introduces an improved method for the estimation of household HC as an LV by means of formative and reflective indicators in agreement with the accepted economic definition of HC. The monetary value of HC is used in a recursive causal model to obtain short- and long-term multipliers that measure the direct and total effects of the variables that determine household HC. The new method is applied to estimate US household HC for year 2004.

Analysis and Measurement of Poverty. Univariate and Multivariate Approaches and Their Policy Implications. A Case Study: Italy

This research presents and discusses the relative merits and limitations of the univariate and multivariate analyses and measurement of poverty to represent the state of poverty, the poverty ratio time path, and to assess the power of these approaches to identify the main causes of poverty and to inspire the proposal of sound socioeconomic policies. The univariate measurement of poverty analyses and estimates simple and composite poverty ratios advanced in the literature and their limitations to represent observed poverty time path and the lack of structural socioeconomic policy implications. The multivariate analysis of poverty advances forward the French social exclusion theory, and Sen’s analysis of functioning and capability, making them operational, in the sense of providing a poverty ratio and deriving its policy implications. In effect, to these analyses are applied the fuzzy set theory to obtain: (i) the poverty ratio of each household; (ii) the poverty ratio of a population of households; and (iii) very important for its policy implications, the poverty ratio of the population by retained attribute, such as, years of schooling of the household head and spouse (if present), house size and condition, and house endowment of sanitary and other services (drinking water, bath, electricity, etc.). Point (iii) allows the researcher to identify the main causes of structural poverty, i.e., the lack of those attributes that contribute to reproduce poverty from generation to generation. The outcome of this research is applied to the data base provided by the Bank of Italy sample surveys in 1993, 1995, 1998 and 2000, and a comparative analysis of the uni- and multi-variate approaches to the measurement of poverty and their policy implications for Italy completes this study.

Linking the Functional and Personal Distributions of Income

By application of the national account system that stems from Luca Paccioli’s accounting principle we can deduce Q = Y = Z, for the three categories of outcome of any macroeconomic process, i.e., output (Q), income (Y) and expenditure (Z).

A Model Of Net Wealth Distribution Specified For Negative, Null and Positive Wealth. A Case Study: Italy

Research on wealth distribution deals with two major categories of variables: (a) total (gross) wealth, and (b) net wealth, which is equal to gross wealth minus total debt. By definition, the economic units’ total wealth takes non-negative values. Pareto’s (1896) seminal monograph Ecrits sur la courbe de la repartition de la richesse does not deal with wealth but with income distribution. Although several models, including Pareto’s, were also proposed to fit wealth distributions, they are restricted to describe only the positive range of wealth since they are not defined for null and negative net wealth and for null total (gross) wealth. The only exception to them is the four-parameter Dagum (1977, 1980a) model which extends the range of income to include the fitting of the total frequency of economic units with null and negative incomes. The fourth parameter a = F(0) = P(Y 2264; 0) estimates this frequency. Although the sample surveys of income distribution in the U.S.A. and Canada present a finite and relatively small frequency of economic units with negative and null incomes, it was not possible to model it because of the lack of information about this part of the distribution. Unlike the net wealth distribution, this was not a major issue because of (i) the observed frequencies of economic units with null and negative incomes are smaller than those of wealth distributions, and (ii) the fourth parameter a in Dagum model gives an accurate and statistically significant estimate of the cumulative frequency F(0).

Jacques Maritain and human rights

Jacques Maritain’s concern and thoughts on human rights and natural law are analyzed and studies in the context of the humanist tradition of mankind. For this, St. Thomas Aquinas-J. Maritain types of law: 1) the natural law, 2) the people law, and 3) the positive law are discussed in relation to the three Maritain characteristics of the human being, i.e., wholeness, independence, and belonging to a society of human beings. From these considerations emerges the superadditive property of society, which is in complete agreement with Aristotles principe that the whole is more than the addition of its parts.Maritain’s concept of normal functioning (doing) jointly with the ontological (being) and the teleological (the goals) dimensions of the human being and society form the basic framework for the analysis of the individualistic, the communist, and the humanistic types of society.This study concludes with the proposition of 1) freedom 2) economic efficiency, 3) social justice, and 4) preservation of the human species and its natural habitat, as the four essential principles for the realization of human rights in a society of societies.