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Sequential Stochastic Dominance and the Robustness of Poverty Orderings

Author

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  • Duclos, Jean-Yves
  • Makdissi, Paul
Abstract
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 equivalence 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. These general conditions extend well-known results to any order of dominance, to the choice of individual versus family based aggregation, and to the estimation of "critical sets" of measurement assumptions. Our theoretical results are briefly illustrated using data for four countries drawn from the Luxembourg Income Study data bases.

Suggested Citation

  • Duclos, Jean-Yves & Makdissi, Paul, 1999. "Sequential Stochastic Dominance and the Robustness of Poverty Orderings," Cahiers de recherche 9905, Université Laval - Département d'économique.
    • Handle: RePEc:lvl:laeccr:9905
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    File URL: http://www.ecn.ulaval.ca/w3/recherche/cahiers/1999/9905.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Poverty; Equivalence scales; Stochastic dominance;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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