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A simple method for measuring inequality

Author

Listed:
  • Thitithep Sitthiyot

    (Chulalongkorn University)

  • Kanyarat Holasut

    (Khon Kaen University)

Abstract

To simultaneously overcome the limitation of the Gini index in that it is less sensitive to inequality at the tails of income distribution and the limitation of the inter-decile ratios that ignore inequality in the middle of income distribution, an inequality index is introduced. It comprises three indicators, namely, the Gini index, the income share held by the top 10%, and the income share held by the bottom 10%. The data from the World Bank database and the Organization for Economic Co-operation and Development Income Distribution Database between 2005 and 2015 are used to demonstrate how the inequality index works. The results show that it can distinguish income inequality among countries that share the same Gini index but have different income gaps between the top 10% and the bottom 10%. It could also distinguish income inequality among countries that have the same ratio of income share held by the top 10% to income share held by the bottom 10% but differ in the values of the Gini index. In addition, the inequality index could capture the dynamics where the Gini index of a country is stable over time but the ratio of income share of the top 10% to income share of the bottom 10% is increasing. Furthermore, the inequality index could be applied to other scientific disciplines as a measure of statistical heterogeneity and for size distributions of any non-negative quantities.

Suggested Citation

  • Thitithep Sitthiyot & Kanyarat Holasut, 2020. "A simple method for measuring inequality," Palgrave Communications, Palgrave Macmillan, vol. 6(1), pages 1-9, December.
    • Handle: RePEc:pal:palcom:v:6:y:2020:i:1:d:10.1057_s41599-020-0484-6
    DOI: 10.1057/s41599-020-0484-6
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    References listed on IDEAS

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    3. Rafael Ninno Muniz & Carlos Tavares da Costa Júnior & William Gouvêa Buratto & Ademir Nied & Gabriel Villarrubia González, 2023. "The Sustainability Concept: A Review Focusing on Energy," Sustainability, MDPI, vol. 15(19), pages 1-22, September.
    4. Louis Chauvel, 2023. "Isograph and LaSiPiKa Distribution: The Comparative Morphology of Income Inequalities and Intelligible Parameters of 53 LIS Countries 1967-2020," LIS Working papers 852, LIS Cross-National Data Center in Luxembourg.
    5. Michael Crilly & Georgiana Varna & Chandra Mouli Vemury & Mark Lemon & Andrew Mitchell, 2023. "Building Equality: A “Litmus Test” for Recognising and Evidencing Inequalities and Segregation in the Built Environment," Urban Planning, Cogitatio Press, vol. 8(1), pages 372-387.
    6. Riyazuddin Khan & Zeeshan & Mohammad Imdadul Haque & Neha Gupta & Mohammad Rumzi Tausif & Isha Kaushik, 2022. "How foreign aid and remittances affect poverty in MENA countries?," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-20, January.
    7. Andrzej Tucki & Korneliusz Pylak, 2021. "Collective or Individual? What Types of Tourism Reduce Economic Inequality in Peripheral Regions?," Sustainability, MDPI, vol. 13(9), pages 1-16, April.
    8. Guo, Minjia & Zong, Xiangyu & Guo, Lubingzhi & Lei, Yongyu, 2024. "Does haze-related sentiment affect income inequality in China?," International Review of Economics & Finance, Elsevier, vol. 94(C).
    9. Thitithep Sitthiyot & Kanyarat Holasut, 2024. "A simple method for joint evaluation of skill in directional forecasts of multiple variables," Papers 2402.01142, arXiv.org.
    10. Stephany, Fabian & Teutloff, Ole, 2024. "What is the price of a skill? The value of complementarity," Research Policy, Elsevier, vol. 53(1).
    11. Bernard Twaróg, 2024. "Assessing Polarisation of Climate Phenomena Based on Long-Term Precipitation and Temperature Sequences," Sustainability, MDPI, vol. 16(19), pages 1-31, September.
    12. John C. Stevenson, 2021. "Dynamics of Wealth Inequality in Simple Artificial Societies," Papers 2108.11892, arXiv.org, revised Oct 2021.
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