Abstract
This paper studies the economic inequality as a phenomenon resulting from two variables: The variable of responsibility which depends on the agents’ performance in the economy, and the variable of opportunity which is independent of the individuals’ performance in the economy. Identifying the contribution of the inequality of opportunity in the total inequality as the problem to be measured, we propose a decomposition of the Atkinson inequality index, by using one of the central solution concepts of cooperative game theory, called the Shapley value.
Highlights
“Social equality is an extremely complex notion” (Sen [1])
This paper studies the economic inequality as a phenomenon resulting from two variables: The variable of responsibility which depends on the agents’ performance in the economy, and the variable of opportunity which is independent of the individuals’ performance in the economy
Identifying the contribution of the inequality of opportunity in the total inequality as the problem to be measured, we propose a decomposition of the Atkinson inequality index, by using one of the central solution concepts of cooperative game theory, called the Shapley value
Summary
“Social equality is an extremely complex notion” (Sen [1]). Walking on the streets of any city with a free market economic system, observing the behaviors and characteristics of the people, we find that economic inequality is a totally natural and usual aspect. This paper provides an identification of the contribution of the inequality of opportunity in the total inequality as the problem to be measured, we propose a decomposition of the Atkinson inequality index, by using one of the central solution concepts of cooperative game theory, called the Shapley value. With this we explain the participation of each of these variables in the total inequality for a given income distribution.
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