Abstract
We derive criteria for ranking income distributions where households differ in equity‐relevant non‐income characteristics (‘needs’). using methods which do not require cardinal specifications of equivalence scales. We consider comparisons for situations where the distributions of needs differ (eg. Cross nationally or intertemporally), building on the results of Atkinson and Bourguignon (1987) and Atkinson (1992). The modifications required when the individual rather than the household is the income‐receiving unit are also discussed. We illustrate the methods with an analysis of changes in social welfare and poverty in the U.K. between 1981 and 1986.
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