Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Crossing Generalised Lorenz Curves

This paper illustrates how Crossing Generalised Lorenz (GL) curves can be used to identify the best income distribution on social welfare grounds within a set of alternative income distributions generated by different policy options. It starts by illustrating two alternative income distributions resulting from policy changes that lead to income increases for some individuals and decreases for others. GL curves are then calculated for the alternative distributions to rank them on welfare grounds on the basis of Shorrocks’ Theorem. After observing that Shorrocks’ Theorem is not applicable, because GL curves cross once, necessary additional conditions, such as restrictions on the features of the Social Welfare Function (SWF) and the shape of income distributions, are set and discussed. Subsequently, a step-by-step procedure to use GL curves to infer welfare judgments when GL cross once, is provided and illustrated with some simple numerical examples.crossing generalised lorenz (GL) curves; social welfare; income distribution; poverty; Shorrocks’ Theorem; social welfare funtion; Rawlsian; diminishing transfers; utilitarian preferences;

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Lorenz Curves

This paper illustrates how Lorenz Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options. After highlighting some drawbacks of using specific functional forms of the Social Welfare Function (SWF) to infer welfare judgments, the rationale for using Lorenz Curves to rank income distributions is provided in a step-by-step procedure and is illustrated with some simple numerical examples. This module also points out the limitations of Lorenz dominance and highlights how, in some circumstances, it is necessary to use Generalised Lorenz (GL) Curves.lorenz curve; social welfare function; generalised lorenz curves; income distributions; inequality; poverty; lorenz dominance; atkinsons theorem;

Impacts of Policies on Poverty. Relative Poverty Lines

This module illustrates how to define “relative” poverty lines, i.e. poverty lines based on approaches that consider the welfare position of each individual or household in relation to the welfare position of other individuals or households belonging to the same community. In particular, the module, after emphasizing the importance of the relative poverty concept in policy work, discusses two methods to define relative poverty lines: a) the “income levels” method; and b) the “income positions” method. It also shows in what these methods differ, and how they can be made operational, by means of step-by-step procedures and examples. In policy work, relativist concepts of poverty are widely used

Impacts of Policies on Poverty. Basic Poverty Measures

This module describes two of the most commonly used poverty measures in applied policy works, i.e., the headcount ratio (HR) and the poverty gap (PG) ratio. These are basic poverty indicators used to investigate impacts of public policies on poverty. After providing a conceptual background to HR and PG, this module describes step-by-step procedures and provides numerical examples to calculate these measures. In addition, advantages and shortcomings of these measures are discussed, and their explanatory power is investigated

Impacts of Policies on Poverty: The Definition of Poverty

This module illustrates how poverty can be defined in the context of policy impact analysis. After reporting and discussing the definition of poverty as “the lack of, or the inability to achieve, a socially acceptable standard of living”, it discusses the mono-dimensional and multi-dimensional approaches to the definition of poverty. Furthermore, the module focuses on the absolute and the relative concept of poverty, also drawing some analogies and differences with the concept of food security. A step-by-step procedure, illustrated real case examples, are then provided to guide the reader through the process of poverty definition for policy impact analysis

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Generalised Lorenz Curves

This module illustrates how Generalised Lorenz (GL) Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options, in many of the cases where ordinary Lorenz curves fail to work After illustrating some pitfalls of ordinary Lorenz Curves, a cursory presentation of the step-by-step procedure to check for Generalised Lorenz dominance and to infer welfare judgements is provided and demonstrated with some simple numerical examples. This module also points out the limitations of the GL approach whenever GL curves cross each other. In addition, it illustrates the need, in some cases, to further restrict the family of admissible Social Welfare Functions (SWF) if a unanimous consensus about the ranking of a given set of income distributions has to be obtained. References to applications in a real country case, references to complementary EASYPol modules, notes for trainers and complementary capacity building facilities, are also provided herewith

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Lorenz Curves

This paper illustrates how Lorenz Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options. After highlighting some drawbacks of using specific functional forms of the Social Welfare Function (SWF) to infer welfare judgments, the rationale for using Lorenz Curves to rank income distributions is provided in a step-by-step procedure and is illustrated with some simple numerical examples. This module also points out the limitations of Lorenz dominance and highlights how, in some circumstances, it is necessary to use Generalised Lorenz (GL) Curves

Impacts of Policies on Poverty. Absolute Poverty Lines

This module illustrates how to define “absolute” poverty lines, i.e poverty lines based on approaches that consider the welfare position of each individual or household as if it were independent of the conditions of other individuals or households belonging to the same community. In particular, this module will discuss the following methods: - the food energy intake (FEI) - the cost of basic needs (CBN) - the consumption insufficiency method (CI) - the budget standard method (BS) The analogies and differences of the above methods will be highlighted and we shall also illustrate how they can be made operational and how they work, by means of step-by-step procedures and examples

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Lorenz Curves

This paper illustrates how Lorenz Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options. After highlighting some drawbacks of using specific functional forms of the Social Welfare Function (SWF) to infer welfare judgments, the rationale for using Lorenz Curves to rank income distributions is provided in a step-by-step procedure and is illustrated with some simple numerical examples. This module also points out the limitations of Lorenz dominance and highlights how, in some circumstances, it is necessary to use Generalised Lorenz (GL) Curves

The future of food and agriculture: Trends and Challenges

The report sheds some light on the nature of the challenges that agriculture and food systems are facing now and throughout the 21st century, and provides some insights as to what is at stake and what needs to be done. What emerges is that “business as usual” is no longer an option but calls for major transformations in agricultural systems, in rural economies and in how we manage our natural resources