r.fgt | R Documentation |
Computes the measure of affluence analogous to the convex version of Foster, Greer and Thorbecke (1984) family of poverty indices.
r.fgt(x, weight, k, alpha)
x |
the income vector |
weight |
vector of weights |
k |
multiple of the median income |
alpha |
parameter of the index: |
Peichl et. al (2008) defined an affluence index. Weighted index (with weights w_1,w_2,...,w_n
) is given by:
R_{\alpha}^{FGT,T2}(\mathbf{x},\mathbf{w},\rho_w)=\frac{\sum_{i=1}^{n} \left( \frac{x_i - \rho_w}{\rho_w}\right)^{\alpha}\mathbf{1}_{x_i>\rho_w}w_i}{\sum_{i=1}^{n}w_i},\alpha>1,
where x_i
is an income of individual i
, n
is the number of individuals, \rho_w
is the richness line, \boldsymbol{1}_{(\cdot)}
denotes the indicator function, which is equal to 1 when its argument is true and 0 otherwise.
Index satisfies transfer axiom T2
(convex): a richness index should decrease when a rank-preserving progressive transfer between two rich individuals takes place.
r |
values of the sum in the index formula |
r.fgt |
the value of index |
Alicja Wolny-Dominiak, Anna Saczewska-Piotrowska
1. Foster J.E., Greer J., Thorbecke E. (1984) A class of decomposable poverty measures. Econometrica, 52, pp. 761-766.
2. Peichl A., Schaefer T., Scheicher C. (2008) Measuring richness and poverty - A micro data application to Europe and Germany. IZA Discussion Paper No. 3790, Institute for the Study of Labor (IZA).
data(affluence)
r.fgt(affluence$income, weight = NULL, 2, 1)
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