INEQUALITY MEASURES
June 2019, Paper-II
Question
Which one is not axioms of inequality measures?
a) Principles of scale invariance
b) Principle of equity
c) Principle of translation invariance
d) Axiom of decomposability
Answer B
The theory of inequality measurement is examined using some basic axioms which extend the Pigou/Dalton principle of transfers. Axioms, in inequality measurement, are desirable properties of inequality measures. They define the way in which inequality measures should behave. When an inequality index is chosen because it respects some desirable properties, it is said that inequality measurement follows an axiomatic approach.
Using axioms may help to choose among inequality indexes. When an inequality index is chosen because it respects some desirable properties, it is said that inequality measurement follows an axiomatic approach.
Five main axioms will be considered:
ƒ The principle of transfers (also known as the Pigou-Dalton principle)
ƒ Scale invariance
ƒ Translation invariance
ƒ The principle of population
ƒ Decomposability
Scale invariance is a feature of objects or laws that do not change if scales of length, energy, or other variables, are multiplied by a common factor, and thus represent a universality.
Translation invariance means that the system produces exactly the same response, regardless of how its input is shifted.
The decomposability axiom requires a consistent relation between overall inequality and its parts.