A0959
Title: Quantifying income inequality: The Lorenz dominance index
Authors: Weiwei Zhuang - University of Science and Technology of China (China) [presenting]
Abstract: Lorenz dominance is a classical criterion for comparing income distributions in terms of inequality and social welfare. However, in its binary nature, where one distribution either dominates or does not often leads to inconclusive assessments when empirical Lorenz curves intersect. To address this limitation, the Lorenz dominance index (LDI) is introduced, a continuous measure that quantifies the extent to which one Lorenz curve lies above another. The LDI provides an interpretable, population-based assessment of partial or near dominance, enhancing its applicability in empirical contexts. The index's asymptotic distribution is derived, and a nonparametric bootstrap procedure is proposed for constructing confidence intervals and conducting inference. Monte Carlo simulations demonstrate that the proposed estimator exhibits strong finite-sample performance and nominal coverage. An application to household income data from China illustrates the LDI's practical utility in distributional analysis.
