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SEQUENTIAL STOCHASTIC DOMINANCE AND THE ROBUSTNESS OF POVERTY ORDERINGS
Author(s) -
Duclos JeanYves,
Makdissi Paul
Publication year - 2005
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2005.00145.x
Subject(s) - stochastic dominance , poverty , equivalence (formal languages) , econometrics , robustness (evolution) , economics , dominance (genetics) , index (typography) , statistics , mathematics , computer science , economic growth , biology , biochemistry , discrete mathematics , world wide web , gene
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 easily‐checked 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 databases.