Some readings for this month

Some readings on “Income and Wealth Inequality” measurement:

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6 responses to this post.

  1. Posted by Sriram on September 3, 2015 at 2:05 am

    Are there any good references on inequality decomposition based on income sources? Is there any current research going in this area. Gini exhibits non-negativity constraints and so decomposition based on it may be misleading.

    Reply

  2. Hi Sriram,
    I haven’t studied decompositions in particular and don’t know of the best reference on it .There are some papers by Cowell though that discusses it. Have you looked at the paper by Cowell and Fiorio titled “Inequality Decompositions”. The general thing I know is that entropy indexes such as Theil are easily decomposable but Gini is not.
    Maybe other readers can give more information.

    Reply

  3. Posted by NickR on September 11, 2015 at 1:31 am

    Have you thought about Shapley value decomposition? The idea is that when I is a function of x1…xk we can assess the contribution of each x term to I (where I might be an inequality measure) by systematically eliminating each. You then average over all possible elimination paths to get an exact decomposition.

    Reply

  4. Posted by Sriram on September 11, 2015 at 9:28 am

    Nick,

    Yes, I knew about Shapley value decomposition. But I am not sure that it is as intuitive as Gini or Theil measures. Using gini and theil one could actually calculate marginal effects of income sources on the overall inequality. Is it possible to do this using shapley value decomposition?

    Cheer,
    Sriram

    Reply

  5. Posted by NickR on September 11, 2015 at 2:53 pm

    I think the idea if Shapley decomposition makes sense, but in practice it feels like a very mechanical black-box type calculation (at least for me when I have done it). Are you talking about the Lerman and Yitzhaki method for Gini?

    Reply

  6. Posted by Sriram on September 12, 2015 at 8:41 am

    Yes, it is about Lerman and Yitzaki. Nowadays Lerman is working on other interesting topics and is based in American University.

    Reply

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