Seminar

Inequality with Ordinal Data

Emmanuel Flachaire (GREQAM)

March 27, 2012, 15:30–17:00

Toulouse

Room Amphi S

Econometrics Seminar

Abstract

The standard theory of inequality measurement assumes that the equalisand is a cardinal quantity with known cardinalisation. However, one may need to make inequality comparisons where either the cardinalisation is unknown or the underlying data are categorical. We propose a natural way of evaluating individuals' status in such situations, based on their position in the distribution and develop axiomatically a class of inequality indices, conditional on a reference point. We examine the merits of mean, median and maximum status as reference points. We also show how the approach can be applied to perceived health status and reported happiness.