Publicidad
Próximo SlideShare
(Linear Regression) Write python codes in a Jupyter notebook that impl.docx
Cargando en ... 3
1 de 1
Publicidad

### (Every proof and expression should be done mathematically) Atkinson's.docx

1. ( Every proof and expression should be done mathematically) Atkinson's inequality index can be derived by assuming a consumer with preferences for the Von Neumann-Morgenstern risk that is placed behind the veil of ignorance and asked to evaluate income distributions. Since he is behind the veil of ignorance, this consumer does not know what income he will get in distribution. It therefore evaluates an income distribution with a density fy(Y) By maximizing its expectation of usefulness. Suppose the well-being index SW(fy) Is the value of this income distribution: SW(fy)= integral ( 0 to Ymax) ( u(Y)*fy(Y)dy) A relative inequality index can then be defined as the relative cost of inequality I= (mu(y)))/mu(y) Where mu(y) Is the average income in the distribution fy(Y) and is the equivalent income also distributed, the parallel of the certain equivalent in risk theory. Is therefore implicitly defined by U()= integral ( 0 to Ymax) ( u(Y)*fy(Y)dy) Atkinson considers that this consumer has a utility function of the CRRA type: U(Y)= (Y^(1))/1- In which the risk aversion coefficient Is reinterpreted as a coefficient of aversion to inequality. Give an expression for Atkinson's inequality index.
Publicidad