Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260076 
Year of Publication: 
2014
Series/Report no.: 
Working Paper No. 2013:18
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
What change in the distribution of a population's health preserves the level of inequality? The answer to this analogous question in the context of income inequality lies somewhere between a uniform and a proportional change. These polar positions represent the absolute and relative inequality equivalence criterion (IEC), respectively. A bounded health variable may be presented in terms of both health attainments and shortfalls. As a distributional change cannot simultaneously be proportional to attainments and to shortfalls, relative inequality measures may rank populations differently from the two perspectives. In contrast to the literature that stresses the importance of measuring inequality in attainments and shortfalls consistently using an absolute IEC, this chapter formalizes a new compromise concept for a bounded variable by explicitly considering the two relative IECs, defined with respect to attainments and shortfalls, to represent the polar cases of defensible positions. We use a surplus-sharing approach to provide new insights on commonly used inequality indices by evaluating the underpinning IECs in terms of how infinitesimal surpluses of health must be successively distributed to preserve the level of inequality. We derive a one-parameter IEC that, unlike those implicit in commonly used indices, assigns constant weights to the polar cases independent of the health distribution.
Subjects: 
health inequality
bounded variable
inequality equivalence criteria
JEL: 
D63
I14
Document Type: 
Working Paper

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