Working Paper 2012-283
We propose and characterize a generalization of the classical linear index of individual deprivation based on income shortfalls. Unlike the original measure, our class allows for increases in the income of a higher-income individual to have a stronger impact on a person’s deprivation the closer they occur the income of the individual whose deprivation is being assessed. The subclass of our measures with this property is axiomatized in our second result.
Authors: Walter Bossert, Conhita D’Ambrosio.