The Economics of Poverty and Inequality, by Frank A. Cowell (ed.)

Edward Elgar, Cheltenham, 2003, 2 volumes, 1360 pp, hb, 1 84064 567 9, £340. Order this book

This magnificent collection is a must for every welfare economics and general economics library – it’s only a pity that its price puts it out of reach of students of the economics of poverty and inequality.
The first volume opens with the editor’s introduction on “the elements of the modern approach to inequality and poverty measurement [which] involves the definition of an income concept, an ethical or other basis for distributional comparisons and a set of assumptions or axioms which give meaning to an ordering or ranking principle” (p.xiii). The introduction is a model of clarity (as are the editor’s lectures, which this reviewer once experienced), though a discussion of the meaning of ‘welfare’ would have been welcome, and a discussion of whether or not welfare can in principle be calculated would have been equally welcome. The paragraphs on ‘welfare and inequality rankings’ correctly recognise the diversity of possible meanings of ‘welfare’ – and in volume II Deaton and Muellbauer’s paper ‘On Measuring Child Costs’ (vol. II, pp.317-341) recognises one particular difficulty with the concept of welfare:

“The measures in this paper tell us about the effects of children on adult welfare, but they do not tell us about the welfare levels of the children themselves. Indeed, we doubt that household expenditure data in anything like their traditional form can tell us very much about the relative welfare levels of adults and children. One possible assumption is that everyone in the household shares the same welfare level, and this would enable comparisons of welfare or inequality with individuals as the basis of analysis. However, there are cases in which such an assumption would be clearly inappropriate, for example, in societies in which women and children are treated as the chattels of a dominant male. In such a society, it might be argued that only adults or only males should count in analysing welfare” (vol. II, p.339).

Arguably, definitions of poverty rely on definitions of welfare, so to develop a robust definition of welfare is an essential task, and one to which the publisher might one day devote a volume.

The papers in this collection are divided into sections. In volume I: the welfare basis of distributional analysis, welfare and inequality rankings, inequality measurement, inequality – welfare approach, inequality – structure, multidimensional approaches, polarization, and horizontal equity. In volume II come sections on the poverty concept and the poverty line, on poverty measures, on poverty axioms and rankings, on welfare, inequality and needs, on relative deprivation, on progressivity, on dynamics (i.e., on entering and exiting poverty), on functional forms of income and wealth distribution, and on statistical issues.
There are historically important papers (such as Lorenz’s 1905 ‘Methods of Measuring the Concentrations of Wealth’ with its characteristic curves), numerous papers and chapters from 1970 onwards, and a few recent pieces (such as Vallentyne’s ‘Equality, Efficiency and the Priority of the Worse-off’).

It is of course impossible to comment in detail in a short review such as this on the seventy-one papers included in these two volumes, except to say that they seem to this reviewer to address the important issues and to be precisely the kind of papers which a student of welfare economics will require. There is a name index, but not a subject index, which is a pity, as these two volumes will be a valuable resource for both students and their teachers and a subject index would have made the collection more usable.

Finally: congratulations to Professor Tony Atkinson on having the longest total index entry.