Almost dominance: inference and application

Abstract

This article proposes a general framework for inference on three types of almost dominances: almost Lorenz dominance, almost inverse stochastic dominance, and almost stochastic dominance. We first generalize almost Lorenz dominance to almost upward and downward Lorenz dominances. We then provide a bootstrap inference procedure for the Lorenz dominance coefficients, which measure the degrees of almost Lorenz dominance. Furthermore, we propose almost upward and downward inverse stochastic dominances and provide inference on the inverse stochastic dominance coefficients. We also show that our results can be easily extended to almost stochastic dominance. Simulation studies demonstrate the finit..