Paul Makdissi

Consumption dominance curves: testing for the impact of indirect tax reforms on poverty

Abstract A new tool is presented to test for the robustness of the impact on poverty of marginal tax reforms for pairs of commodities. Consumption Dominance Curves exist for every order of stochastic dominance. An illustration is provided with Bolivian data.

Sequential Stochastic Dominance and the Robustness of Poverty Orderings

When comparing poverty across distributions, an analyst must select a poverty line to identify the poor, an equivalence scale to compare individuals from households of different compositions and sizes, and a poverty index to aggregate individual deprivation into an index of total poverty. A different choice of poverty line, poverty index or equivalent scale can of course reverse an initial poverty ordering. This paper develops sequential stochastic dominance conditions that throw light on the robustness of poverty comparisons to these important measurement issues.

Measuring socioeconomic health inequalities in presence of multiple categorical information.

While many of the measurement approaches in health inequality measurement assume the existence of a ratio-scale variable, most of the health information available in population surveys is given in the form of categorical variables. Therefore, the well-known inequality indices may not always be readily applicable to measure health inequality as it may result in the arbitrariness of the health concentration indexs value. In this paper, we address this problem by changing the dimension in which the categorical information is used. We therefore exploit the multi-dimensionality of this information, define a new ratio-scale health status variable and develop positional stochastic dominance conditions that can be implemented in a context of categorical variables. We also propose a parametric class of population health and socioeconomic health inequality indices. Finally we provide a twofold empirical illustration using the Joint Canada/United States Surveys of Health 2004 and the National Health Interview Survey 2010.

Testing for Pro-Poorness of Growth, with an Application to Mexico

This paper proposes techniques to test for whether growth has been pro-poor. We first review different definitions of pro-poorness and argue for the use of methods that can generate results that are robust over classes of pro-poor measures and ranges of poverty lines. We then provide statistical procedures that rely on the use of sample data to infer whether growth has been pro-poor in a population. We apply these procedures to Mexican household surveys for the years of 1992, 1998 and 2004. We find strong statistical evidence that Mexican growth has been absolutely anti-poor between 1992 and 1998, absolutely pro-poor between 1998 and 2004 and between 1992 and 2004, and relatively pro-poor between 1992 and 2004 and between 1998 and 2004. The relative assessment of the period between 1992 and 1998 is statistically too weak to lead to a robust evaluation of that period.

Poverty-Efficient Transfer Programs: The Role of Targeting and Allocation Rules

We propose simple graphical methods to identify poverty-reducing transfer program reforms. The methods are based on Program Dominance curves that display cumulative program benefits weighted by powers of poverty gaps. These curves can be decomposed simply as sums of targeting dominance curves and allocation dominance ones, and can serve to verify whether the assessment of program reforms is sensitive to the choice of poverty lines and poverty measures as well as to differences in revenue sources and behavioral impacts across programs.

Fuel poverty and access to electricity: comparing households when they differ in needs

Although sequential stochastic dominance techniques have been used in the literature to make comparisons of income poverty which are robust to the assumptions made about the economies of scale within households, the techniques could be applied to a much wider set of issues. In this paper, these techniques are applied to energy deprivation in Guatemala. Fuel poverty is compared among households with and without access to electricity, and it is assessed whether access to electricity for those who do not have access currently would eliminate the observed difference in fuel poverty between the two groups of households.

Analyzing the impact of indirect tax reforms on rank-dependent social welfare functions: a positional dominance approach

A new approach is developed to identify marginal tax reforms for pairs of commodities and to test for the robustness of their impacts on Yaari’s dual social welfare functions. The rank-dependent social evaluation approach gives rise to a new device, the s-concentration curve, which is a generalization of the standard concentration curve. The s-concentration curves are provided for every order of positional dominance and an illustration is performed using Canadian data.

Restricted Inequality and Relative Poverty

This paper develops criteria for a new concept of restricted inequality dominance and show how they relate to criteria for comparing relative poverty. The results warn against the use of some popular indices of inequality.\ They do, however, suggest an interesting extension of the Schutz coefficient as well as a use of Lorenz curves for the analysis of relative poverty and restricted inequality. We also illustrate graphically how the new criteria of restricted inequality dominance extend the ranking power of previously proposed inequality dominance criteria.

Decomposition of S-Concentration Curves

For any given order of inverse stochastic dominance, standard concentration curves are decomposed into three components, called contribution curves. Those components correspond to within-group inequalities, between-group inequalities, and transvariational inequalities. We prove, for all orders, that contribution curve dominance implies systematically welfare-improving tax reforms and conversely. Accordingly, as welfare expansions may be costly in terms of particular inequalities, we propose targeted fiscal reforms.

Defining and measuring extreme poverty

An axiomatic approach is used to propose a measure of extreme poverty which is not only multidimensional in nature, but also recognizes the fact that there are interaction effects between different deprivations, and that the length of time during which deprivations are felt may also have a negative impact on household well-being. The proposed definition of extreme poverty formalizes an approach developed by Joseph Wresinski, the founder of the International Movement ATD Fourth World.