Measurement of inequality of opportunity based on counterfactuals
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Measurement of inequality of opportunity based on counterfactuals Dirk Van de gaer1,2,3 · Xavier Ramos4,5,6 Received: 14 November 2017 / Accepted: 10 May 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The theoretical literature on inequality of opportunity formulates basic properties that measures of inequality of opportunity should have. Standard methods for the measurement of inequality of opportunity determine the inequality in counterfactual outcome distributions that are constructed by statistical methods. We show that, when standard parametric procedures are used to construct the counterfactuals, the choice of inequality measurement method and the statistical specification interact to determine whether the resulting measure of inequality of opportunity satisfies the basic properties.
We thank the Editor, Marc Fleurbaey, anonymous referees of the Journal, Gerdie Everaert, José Luis Figueroa, François Maniquet, Erik Schokkaert and Alain Trannoy for many useful comments and suggestions. Dirk Van de gaer acknowledges financial support from the FWO-Flanders, research project 3G079112. Both authors acknowledge financial support of project ECO2016-76506-C4-4-R (Ministerio de Ciencia y Tecnología) and Xavier Ramos acknowledges financial support of project 2017SGR-1571 (Direcció General de Recerca). * Dirk Van de gaer [email protected] Xavier Ramos [email protected] 1
Department of Economics, Ghent University, Sint‑Pietersplein 6, 9000 Ghent, Belgium
2
CORE, UCL, Voie du Roman Pays 34, 1348 Louvain‑la‑Neuve, Belgium
3
IAE‑CSIC, Universitat Autònoma de Barcelona Campus, 08193 Bellaterra, Barcelona, Spain
4
Departament d’ Economia Aplicada, Universitat Autònoma de Barcelona, Edifici B‑Campus UAB, 8193 Bellaterra, Spain
5
EQUALITAS, Barcelona, Spain
6
IZA, Bonn, Germany
13
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D. Van de gaer, X. Ramos
1 Introduction Theories of equality of opportunity, see, e.g., Dworkin (1981a; b), Arneson (1989), Cohen (1989), Roemer (1993; 1998) put individual responsibility in the forefront in the assessment of the distribution of outcomes. Individuals’ outcomes such as their income level, educational attainment or health status, are determined by two kinds of factors. On the one hand, there are circumstances, factors that are beyond individuals’ responsibility. On the other hand, there are efforts, factors for which individuals are responsible. Inequalities that are due to circumstances are deemed ethically unacceptable while those arising from efforts are not considered offensive. Hence, the outcome inequalities associated with these two factors should be treated differently.1 Following Fleurbaey and Peragine (2013) closely, we formulate two desirable properties that a measure of inequality of opportunity should have. The idea that inequalities that are due to unequal circumstances are offensive is reflected in the compensation principle: a Pigou–Dalton transfer reducing inequalities between individuals that have the same efforts (such that the resulting ine
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