Single crossing Lorenz curves and inequality comparisons

Abstract

Since the order generated by the Lorenz criterion is partial, it is a natural question to wonder how to extend this order. Most of the literature that is concerned with that question focuses on local changes in the income distribution. We follow a different approach, and define uniform α-spreads, which are global changes in the income distribution. We give necessary and sufficient conditions for an Expected Utility or Rank-Dependent Expected Utility maximizer to respect the principle of transfers and to be favorable to uniform α-spreads. Finally, we apply these results to inequality indices.