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Lost in Translation: Rethinking the Inequality Equivalence Criteria for Bounded Health Variables

ISBN: 978-1-78190-553-1, eISBN: 978-1-78190-554-8

Publication date: 30 December 2013

Abstract

What change in the distribution of a population’s health preserves the level of inequality? The answer to this analogous question in the context of income inequality lies somewhere between a uniform and a proportional change. These polar positions represent the absolute and relative inequality equivalence criterion (IEC), respectively. A bounded health variable may be presented in terms of both health attainments and shortfalls. As a distributional change cannot simultaneously be proportional to attainments and to shortfalls, relative inequality measures may rank populations differently from the two perspectives. In contrast to the literature that stresses the importance of measuring inequality in attainments and shortfalls consistently using an absolute IEC, this chapter formalizes a new compromise concept for a bounded variable by explicitly considering the two relative IECs, defined with respect to attainments and shortfalls, to represent the polar cases of defensible positions.

We use a surplus-sharing approach to provide new insights on commonly used inequality indices by evaluating the underpinning IECs in terms of how infinitesimal surpluses of health must be successively distributed to preserve the level of inequality. We derive a one-parameter IEC that, unlike those implicit in commonly used indices, assigns constant weights to the polar cases independent of the health distribution.

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Acknowledgements

Acknowledgment

We acknowledge financial support from the Swedish Council for Working Life and Social Research (FAS) (dnr 2012-0419). The Health Economics Program (HEP) at Lund University also receives core funding from FAS (dnr. 2006-1660), the Government Grant for Clinical Research (“ALF”), and Region Skåne (Gerdtham). We would like to thank Dennis Petrie for inspiring and fruitful discussions on the topic. We are also grateful to Jens Gudmundsson, Jens Dietrichson, Åsa Ljungvall, and the editors of this volume for providing valuable feedback and suggestions. We are responsible for all remaining errors.

Citation

Kjellsson, G. and Gerdtham, U.-G. (2013), "Lost in Translation: Rethinking the Inequality Equivalence Criteria for Bounded Health Variables", Health and Inequality (Research on Economic Inequality, Vol. 21), Emerald Group Publishing Limited, Leeds, pp. 3-32. https://doi.org/10.1108/S1049-2585(2013)0000021002

Publisher

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Emerald Group Publishing Limited