James E. Foster

Transfer Sensitive Inequality Measures

Transfer sensitivity has been seen as a means of strengthening the Pigou-Dalton principle of transfers, by ensuring that more weight in the inequality assessment is attached to transfers taking place lower down in the distribution. This paper examines the concept of transfer sensitivity in detail and proposes a new definition that can be usefully applied in general contexts. The definition is based on the notion of favourable composite transfers which involve a regressive transfer combined with a simultaneous progressive transfer at a lower income level. The paper proceeds to identify when one distribution can be obtained from another using a sequence of progressive transfers and favourable composite transfers, and hence when all transfer sensitive Pigou-Dalton indices agree on their pairwise inequality ranking. Since agreement occurs in some situations when Pigou-Dalton indices are not unanimous, transfer sensitivity adds power to the unambiguous inequality judgements based on the Pigou-Dalton condition and, in particular, enables distributions whose Lorenz curves intersect to be conclusively ranked.

Subgroup Consistent Poverty Indices

It seems desirable that the overall level of poverty should fall whenever poverty decreases within some subgroup of the population and is unchanged outside that group. Yet this simple and attractive property, which we call subgroup consistency, is violated by many of the poverty indices suggested in recent years. This paper characterizes the class of subgroup consistent poverty indices, and identifies the special features associated with this property. Copyright 1991 by The Econometric Society.

Poverty Orderings and Welfare Dominance

This paper examines the partial orderings of discrete distributions derived from various poverty indices and sets of welfare functions. The poverty ordering with respect to some indexP is the ordering obtained whenP ranks consistently over a range of admissible poverty lines. The poverty orderings derived from the headcount ratio, the per-capita income gap and another “distribution-sensitive” index are characterized in some detail when the poverty standard is allowed to take any positive value, and these orderings are shown to coincide with the natural interpretation of first, second and third degree “welfare dominance”, respectively. Additional results are then obtained for the situation in which the admissible poverty lines cannot exceed some finite upper bound.

Path Independent Inequality Measures

Abstract This paper explores a natural decomposition property motivated by Shorrocks (1980, Econometrica 48 , 613–625) and Anand (1983, “Inequality and poverty in Malaysia,” Oxford University Press) that we call path independent decomposability . Between-group inequality is found by applying the inequality measure to the smoothed distribution, which replaces each income in a subgroup with its representative income. Within-group inequality is the measure applied to the standardized distribution, which rescales subgroup distributions to a common representative income level. Path independence requires overall inequality to be the sum of these two terms. We derive the associated class of relative inequality measures—a single parameter family containing both the second Theil measure (the mean logarithmic deviation) and the variance of logarithms. Journal of Economic Literature Classification Numbers: C43, D31, D63, 015.

Lorenz dominance and the variance of logarithms

The variance of logarithms is a widely used inequality measure which is well known to disagree with the Lorenz criterion. Up to now, the extent and likelihood of this inconsistency were thought to be vanishingly small. We find that this view is mistaken : the extent of the disgreement can be extremely large; the likelihood is far from negligible.

INVESTING IN HEALTH: THE LONG-TERM IMPACT OF HEAD START ON SMOKING

Head Start is a comprehensive, early childhood development program designed to augment the human capital and health capital levels of disadvantaged children. Grossmans (1972) health capital model suggests that early investments of this type should have lasting effects on health outcomes. This research evaluates the impact of Head Start on long-term health by comparing health outcome and behavioral indicators of adults who attended Head Start with those of siblings who did not. The results suggest that there are long-term health benefits from participation in Head Start and that these benefits result from lifestyle changes.

Inequality and welfare in market economies

Abstract Atkinson (1970) and Kolm (1969) have shown how Lorenz ranking of distributions of a fixed amount of income (or a single commodity) may correspond to social welfare rankings: lower inequality indicates higher social welfare. Atkinson and Bourguignon (1982) and Kolm (1977) offer two ways of extending this result to multi-commodity environments. We investigate an alternative approach based on the existence of markets and market prices at which agents maximize utility. Our main result offers a welfare-based method of making real national income comparisons which takes into account the distribution of individual welfare.

Complimentarily yours: Free examination copies and textbook prices

Abstract Textbook publishers have asserted that the sale of complimentary textbooks by professors raises textbook prices to students. This paper explores this assertion by modeling the effect of complimentary copy sale on publishers edition life decision. This decision determines the mix of new and used books available, and hence the average price paid by students. Contrary to publishers assertions, we find that increased propensity to sell complimentary copies by professors will tend to lengthen edition life, and hence reduce the mean price paid by students.

Poverty Indices and Decomposability

Publisher Summary This chapter discusses poverty indices and decomposability. It presents the desirable features of the FGT (Foster, Greer, and Thoerbecke) measures, and discusses that whether other types of indices also share these properties. All indices satisfy five restrictions commonly imposed on poverty indices—symmetry; replication invariance; the focus axiom; monotonicity; and continuity in the incomes of the poor. Overall poverty is a weighted average of subgroup poverty, with weights equal to the subgroup population shares. Decomposability is an attractive feature as it ensures that the overall poverty value will always move in the same direction as poverty levels within subgroups. In other words, if poverty increases within one subgroup, and remains the same elsewhere, then overall poverty must increase. This property is referred to as subgroup consistency. Subgroup consistency is a weaker condition than decomposability, and appears to be a highly desirable feature. The chapter also presents the implications of the subgroup consistency condition in the context of a poverty index.

Data and Analysis

• The team collected the amount of dust produced in one basement while a train was being loaded out. • The floors were swept in approximately one hour intervals. • The rate of dust produced came to be 62.8 lbs. per hour within the basement that measured 9015 square foot.