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Measuring Inequality

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  • GUILLERMINA JASSO

    (University of Michigan)

Abstract

Since unambiguous ranking of income distributions according to their degree of inequality is not always possible, choice of inequality measure must rest on the appropriateness of particular measures for particular substantive problems. This article provides a complete account of one measure of inequality, δ, defined, for x > 0, as the ratio of the geometric mean to the arithmetic mean—a measure that is closely linked to the sense of distributive justice. Its properties are summarized, and formulas reported for the effects of transfers and of location changes. Analytic expressions for δ for three classical probability distributions—the Pareto, Lognormal, and Rectangular families—are provided, and δ's behavior in within-family comparisons discussed. The measure δ's behavior in between-family comparisons is explored using a new procedure for bounding the zones of ambiguity in inequality comparisons. Finally, a newly obtained decomposition formula for δ is reported.

Suggested Citation

  • Guillermina Jasso, 1982. "Measuring Inequality," Sociological Methods & Research, , vol. 10(3), pages 303-326, February.
    • Handle: RePEc:sae:somere:v:10:y:1982:i:3:p:303-326
    DOI: 10.1177/0049124182010003004
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    References listed on IDEAS

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    1. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    2. Champernowne, D G, 1974. "A Comparison of Measures of Inequality of Income Distribution," Economic Journal, Royal Economic Society, vol. 84(336), pages 787-816, December.
    3. Rothschild, Michael & Stiglitz, Joseph E., 1973. "Some further results on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 188-204, April.
    4. Fields, Gary S & Fei, John C H, 1978. "On Inequality Comparisons," Econometrica, Econometric Society, vol. 46(2), pages 303-316, March.
    5. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
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