An axiomatic characterization of the Theil inequality ordering
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- Lasso de la Vega, C., Urrutia, A. & Volij, O. Econ Theory (2013) 54: 757. doi:10.1007/s00199-012-0739-6
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We axiomatically characterize the Theil ordering of income inequality. In addition to the uncontroversial axioms of anonymity, homogeneity, replication invariance, strong directedness, and a standard continuity property, we appeal to both an independence and a decomposability axioms. These two axioms are ordinal implications of Theil decomposability, the central axiom in previous characterizations of the Theil index. To the best of our knowledge, the present is the first fully ordinal characterization of this index.