Exercise 8.48
The government wishes to determine whether increasing the price of HEALTHEQ by 5%, for the benefit of a revenue-neutral fall in the price of SCHEXPEQ, would be good for inequality reduction. Assume a ratio of MCPF=1. Find out the impact on the Lorenz curve and on the Gini coefficient.
Answer

RECALL

 
STEP 1: Initialising  the sampling weight: EDIT|Set Sample Design

 

  • After choosing the appropriate variable(s), click on  the button OK.

 

STEP 2: Use the DAD Application: CURVES| CONCENTRATION CURVE

  • After choosing the appropriate variable(s) and parameters, click on the COMPUTE button.

RESULTS
 
  • Estimated  ICx_j(r)-  ICx_l(r)=0.30353544
  • mx_j/my : 0.05105644
  • Total impact : 5% * 0.05105644 * 0.30353544 = 0.00077487194901