5 - Poverty, Inequality and Development Flashcards Preview

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Flashcards in 5 - Poverty, Inequality and Development Deck (11)
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1
Q

Inequality measure

A

Rule which assigns degree of inequality to each income distribution

2
Q

How do we describe an income distribution?

A
  • n individuals, income of the ith individual = Yi, i=1,2,3, n
  • Income distribution I, describes how much income Yi received by individual I
  • I (Y1,Y2,Y3 Yn)
3
Q

Anonymity Principle

A
  • It doesn’t matter who receives the income
    • unimportant whether person A receives X and B receives Y or vice versa
  • Therefore can always rank income distribution such that Y1≤Y2 ≤ Y3 ≤ Yn)
    • can rank from poorest to richest
    • without losing valuable information
4
Q

Relative Income Principle

A

Income levels in themselves are not important

Not absolute but rather relative incomes that matter

Shortfalls in absolute income rather addressed when studying poverty measurement

5
Q

Dalton principle

A

If one income distribution can be achieved from another by constructing a series of regressive transfers, then the former distribution MUST be more unequal than the latter

6
Q

For every income distribution I(Y1,Y2,Y3 Yn) and every transfer t>0

A

I(Y1, ,Yi, ,Yj, ,Yn)

7
Q

Population principle

A

The size of the population is irrelevant

- If double the population, relative inequality remains the same

8
Q

Lorenz Curve

A

Perfect equality - % of income = % population

9
Q

Lorenz Criterion:

A

If Lorenz curve lies at every point to the RHS of the Lorenz curve of some other distribution, the former is more unequal than the latter

10
Q

Inequality measure consistent with the Lorenz criterion ONLY if:

A

simultaneously satisfies 4 principles

Incorporates anonymity, population and relative principles because curve drops all information on income and population in magnitudes and retains only population shares

11
Q

Mean Absolute Deviation (M):

A

Accounts for entire income distribution