Median Independent Inequality Orderings

Ramses H. Abul Naga, Tarik Yalcin

DARP 103. October 2010.
To date, inequality orderings for ordered response data are only suitable forcomparing distributions that share a common median state. In this paper we propose amethodology for comparing distributions irrespective of their medians. We set out todo so by introducing a general pre-ordering and equivalence relation defined overdistributions with different median responses, leading us naturally to derive a partialordering over equivalence classes. We then discuss the implications of our results forthe axiomatic derivation of inequality indices for ordered response data.

Full article: http://sticerd.lse.ac.uk/dps/darp/darp103.pdf

Tax Compliance by Firms and AuditPolicy

Ralph Bayer, Frank A Cowell

DARP 102. September 2010.
Firms are usually better informed than tax authorities about market conditions and thepotential profits of competitors. They may try to exploit this situation by underreportingtheir own taxable profits. The tax authority could offset firms’ informationaladvantage by adopting “smarter” audit policies .that take into account the relationshipbetween a firm’s reported profits and reports for the industry as a whole. Such anaudit policy will create an externality for the decision makers in the industry and thisexternality can be expected to affect not only firms’ reporting policies but also theirmarket decisions. If public policy takes into account wider economic issues than justrevenue raising what is the appropriate way for a tax authority to run such an auditpolicy? We develop some clear policy rules in a standard model of an industry andshow the effect of these rules using simulations.ca3

Full article: http://sticerd.lse.ac.uk/dps/darp/darp102.pdf

Latest Distributional Analysis Research Programme Papers

Median Independent Inequality Orderings

Tax Compliance by Firms and AuditPolicy