A Two-Parameter Family of Socio-Economic Health Inequality Indices: Accounting for Risk and Inequality Aversions

Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2016-15

42 Pages Posted: 28 Nov 2016

See all articles by Stéphane Mussard

Stéphane Mussard

Université de Sherbrooke; CEPS/INSTEAD

María Pi Alperin

Luxembourg Institute of Socio-Economic Research (LISER)

Date Written: October 25, 2016

Abstract

This paper proposes a two-parameter family of socio-economic health inequality indices. First, these indices allow a Boolean risk factor to be associated to other health dimensions. Second, multidimensional health distributions can be compared thanks to a stochastic dominance rule, which includes the attitude of the social planner with respect to the risk factor (risk neutrality, risk aversion and extreme risk aversion). Third, each order of stochastic dominance is also associated to the intensity of possible health transfers occurring between individuals, that is, the degree of inequality aversion of the social planner. This approach is a multidimensional extension of Yitzhaki's Gini indices accounting simultaneously for risk and redistribution.

Keywords: counting, dominance, health, inequality, risk

JEL Classification: D60, I10

Suggested Citation

Mussard, Stéphane and Pi Alperin, María, A Two-Parameter Family of Socio-Economic Health Inequality Indices: Accounting for Risk and Inequality Aversions (October 25, 2016). Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2016-15. Available at SSRN: https://ssrn.com/abstract=2866327 or http://dx.doi.org/10.2139/ssrn.2866327

Stéphane Mussard (Contact Author)

Université de Sherbrooke ( email )

2500 bd de l'Universite
Sherbrooke, Québec J1K 2R1
Canada

CEPS/INSTEAD ( email )

B.P.48
Differdange, L-4620
Luxembourg

María Pi Alperin

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11 Porte des Sciences
Esch-sur-Alzette, L-4366
Luxembourg
+352585855416 (Phone)

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