Disparities in Socio-Economic Outcomes

Working Paper 2012-281

Abstract

Demographic disparities between the rates of occurrence of an adverse economic outcome can be observed to be increasing even as general social improvements supposedly lead towards the elimination of the adverse outcome in question. Scanlan (2006) noticed this tendency and developed a ‘heuristic rule’ to explain it. In this paper, we explore the issue analytically, providing a criterion from stochastic ordering theory under which one of two demographic groups can be considered disadvantaged and the other advantaged, and showing that Scanlan’s heuristic obtains as a rigorous finding in such cases. Normative implications and appropriate social policy are discussed.

Authors: Peter J. Lambert , S. Subramanian.