Equality of What Experimental Tests of Multidimensional Inequality Measures.pdfVIP

1 Equality of What? Experimental Tests of Multidimensional Inequality Measures HAN BLEICHRODT, KIRSTEN I.M. ROHDE TOM VAN OURTI Erasmus School of Economics, Rotterdam November 2008 Abstract Reducing inequality in well-being is an important aim of social policy. Most empirical research on inequality measurement has focused on a single dimension. Well-being is, however, multidimensional, being determined by several dimensions simultaneously. A number of multidimensional inequality measures have been proposed, but no insight exists into which of these measures most closely connects with what people find important. We test several of the assumptions underlying these measures. We find support for measures that say that decreases in the spread of dimensions are socially desirable. Our data are not consistent with measures that say that decreases in the correlation between dimensions are socially desirable. Finally, we find support for Gajdos and Weymark’s (2005) two-stage procedure where in the first stage the inequality in the distribution of each dimension is measured and in the second stage these dimension-specific inequality measures are aggregated. JEL code: D30, D63, I30 KEYWORDS: multidimensional inequality, experimental measurement, social choice. ACKNOWLEDGEMENTS: We thank Aurélien Baillon, Werner Brouwer, Koen Decancq, Peter De Keyzer, Esen Erdogan Ciftci, Jeroen Eynikel, Owen O’Donnell, Erik Schokkaert, Eddy van Doorslaer, Ellen Van de Poel, and Hans van Kippersluis for comments or help with the experiment. This research was made possible through grants from the Netherlands Organization for Scientific Research (NWO) and the NETSPAR project “Income, health and work across the life cycle”. 2 1. Introduction Reducing inequalities in well-being is an important aim of economic and social policy. For example, both the World Health Organization (WHO 2000) and the World Bank (World Bank 2006) explicitly mention it as a major ob