Estimating the parameter of inequality aversion on the basis of a parametric distribution of incomes

Kot, Stanisław Maciej

doi:10.24136/eq.2020.018

Cited by 5 publications

(11 citation statements)

References 55 publications

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“…The papers (Bryl, 2020;Rudenko, 2020) indicates the influence of the long-term development of the chosen human capital indices and public health policies. The articles (Bobáková, 2017;Kot, 2020; assess fiscal decentralization in self-governing regions and improve the public health sphere. The papers (Bilan et al, 2019;Djalilov et al, 2015;Luchko, Arzamasova & Vovk, 2019;Sumiyana, 2020;Vasylieva et al, 2019) investigate the relationship between macroeconomic stability, aggregate of accounting earnings, and national indicators economies.…”

Section: Literature Reviewmentioning

confidence: 99%

Why do regions differ in vulnerability to СOVID-19? Spatial nonlinear modeling of social and economic patterns

Kuzmenko¹,

Vasylieva²,

Vojtovič³

et al. 2020

Economics &Amp; Sociology

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Certain groups of determinants (economic, environmental, social, healthcare) with the highest vulnerability identify the reasons for regional differentiation in morbidity and mortality from COVID-19. This defines the necessity to find appropriate combinations of factors characterizing the vulnerability of a region. The methodology and tools to explain the regional specifics of population vulnerability to COVID-19 are investigated through a systematic consideration of many public health factors, environmental, social and economic specific nature of regions. The aim of the article is to study the reasons for regional differentiation of population vulnerability (morbidity and mortality rates) from COVID-19. The authors investigate a nonlinear spatial model in which the stepwise algorithm of individual factor variables is added/removed from the model specifications step by step by the Aitken method depending on their correlation with morbidity and mortality from COVID-19 in the region. The Farrar-Glober method is used to eliminate the multicollinearity of factors, the Spearman test is used to detect the heteroskedastic effect, and the Darbin-Watson test is used to check the presence of autocorrelation between the residues. As a result, the specification of the model with the highest adequacy in terms of p-value and tstatistics is formed. Relevant socioecological-economic vulnerability indices of regions to mortality and morbidity from COVID-19 are identified. The obtained results allow making adjustments in the state and regional programs concerning the mobilization of economic and healthcare systems.

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Section: Literature Reviewmentioning

confidence: 99%

Why do regions differ in vulnerability to СOVID-19? Spatial nonlinear modeling of social and economic patterns

Kuzmenko¹,

Vasylieva²,

Vojtovič³

et al. 2020

Economics &Amp; Sociology

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“…The method of estimating inequality aversion from a parametric distribution of incomes This paper estimates the parameter ε of inequality aversion using Kot's (2020) method after introducing a slight complement. The method has the following assumptions:…”

Section: Methodology and Datamentioning

confidence: 99%

“…This expected value exists, i.e. SWF is finite if and only if ε lies in the interval (0,ap+1) (Kot, 2020). Any redistributive policy using ε outside this interval would promise infinite social welfare.…”

Section: Introductionmentioning

confidence: 98%

“…The first is to estimate the inequality aversion parameter ε of the constant relative inequality aversion utility function (CRIA) (Atkinson, 1970), employing income data for 55 countries from the Luxembourg Income Study (LIS) database. We estimate ε by the mean of Kot's (2020) method after a small complement. The second aim is to verify some prominent hypotheses proposed in the literature concerning relationships between inequality aversion and some economic phenomena.…”

Section: Introductionmentioning

confidence: 99%

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The atlas of inequality aversion: theory and empirical evidence on 55 countries from the Luxembourg Income Study database

Kot

Paradowski²

2022

Self Cite

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Research background: In the distributive analysis, the constant relative inequality aversion utility function is a standard tool for ethical judgements of income distributions. The sole parameter ? of this function expresses a society?s aversion to inequality. However, the profession has not committed to the range of ?. When assessing inequality and other welfare characteristics, analysts assume an arbitrary level of ?, common to all countries and years. This assumption seems unjustified. Purpose of the article: This paper aims to estimate the parameter ? for each country and year individually using datasets from the Luxembourg Income Study Database in all available years, which dates back to the 1970s. Methods: We utilise the method of estimating ?, which assumes the generalised beta of the second kind distribution of incomes. The estimator of ? is derived from the mathematical condition of the existence of the social welfare function. Findings & value added: We have elaborated an ?atlas? of 388 estimates of ? for 55 countries across time. Inequality aversion is country-year specific, with a minimum of 0.97 and a maximum of 3.8. Ninety per cent of all estimates are less than 2.5. Inequality aversion is negatively correlated with income inequality, but it is independent of economic development. Thus, inequality aversion appears as an additional dimension of the classical inequality-development relationship. This article contributes to solving a fundamental problem of Welfare Economics: directly measuring the social utility of income (welfare) function. The estimates of ? for 55 countries imply a complete knowledge of these countries' constant relative inequality aversion utility functions.

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“…In recent years, these issues have gained importance due to their role in economic development. With knowledge about income distribution in society, we can now measure the quality of life, poverty, and welfare both in time and space (Łukasiewicz et al, 2018;Jędrzejczak & Pekasiewicz, 2020;Kot, 2020). Apart from individual factors such as gender, age, abilities, talent, and health, the income inequality is influenced by external factors, among which assignment of household members to a specific socio-economic group plays an important role (Landmesser, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Self-employment and over-indebtedness in Poland: Modelling income and debt repayments distribution

Wałęga¹,

Wałęga²

2021

EBER

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The objective of the article is to assess financial situation and debt repayments in households of self-employed individuals and compare them to these of other types of households. The article aims to identify the determinants of over-indebtedness. Research Design & Methods:The study focuses on households of self-employed. The results are based on a nationwide CATI survey conducted among 1107 Polish indebted households. Theoretical models of the income distribution (log-logistic, Burr III) and the power-exponential model were used to achieve the research goals. Findings: The economic status of indebted households differentiates income and debt repayments distributions. Self-employed households have a better financial situation and greater inequalities than households of the paid employees and individuals sustaining themselves from other sources of income. The debt repayments of entrepreneurs are higher than in households of paid employees but lower than in other groups of households. The determinants of over-indebtedness are essentially similar regardless of the work status, but the impact of income, number of loans, and debt type on over-indebtedness is greater for self-employed households. Implications & Recommendations:The results on the debt repayments distribution and determinants of overindebtedness may be helpful in creating regulations that preventing household bankruptcies and policies aimed at combating social exclusion. Contribution & Value Added: Introducing the issue of self-employment into the discussion on income and debt distribution and identifying the over-indebtedness among households of self-employed. To assess the debt repayments, we adopt theoretical income distributions and unique source of data on Polish households in debt. Article type:research article

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Estimating the parameter of inequality aversion on the basis of a parametric distribution of incomes

Cited by 5 publications

References 55 publications

Why do regions differ in vulnerability to СOVID-19? Spatial nonlinear modeling of social and economic patterns

Why do regions differ in vulnerability to СOVID-19? Spatial nonlinear modeling of social and economic patterns

The atlas of inequality aversion: theory and empirical evidence on 55 countries from the Luxembourg Income Study database

Self-employment and over-indebtedness in Poland: Modelling income and debt repayments distribution

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