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date: 27 January 2020

Abstract and Keywords

The theory of inequality measurement can be founded on a few very simple principles concerning the comparison of income distributions. This chapter discusses the standard principles and the types of inequality indices that follow from them. It shows how these principles and indices can be related to conventional approaches to social-welfare analysis. Adjusting a few pieces within this same framework enables one to derive alternative, novel types of inequality indices and lays the basis for commonly-used types of poverty indices. The chapter also covers other general approaches to distributional comparisons including first-order and second-order dominance and their interpretation in terms of inequality and poverty.

Keywords: Inequality, poverty, distributional rankings

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