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An inequality paradox: relative versus absolute indices?

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  • Satya R. Chakravarty

    (Indian Statistical Institute)

  • Palash Sarkar

    (Indian Statistical Institute)

Abstract

This paper identifies a paradox for inequality indices which is similar to the well known Simpson paradox in statistics. For the Gini and Bonferroni indices, concrete examples of the paradox are provided and general methods are described for obtaining examples of the paradox for arbitrary size population. Sufficient conditions for the paradox not to hold are developed. The paradox, however, vanishes if we measure inequality by the absolute Gini and Bonferroni indices of inequality.

Suggested Citation

  • Satya R. Chakravarty & Palash Sarkar, 2021. "An inequality paradox: relative versus absolute indices?," METRON, Springer;Sapienza Università di Roma, vol. 79(2), pages 241-254, August.
    • Handle: RePEc:spr:metron:v:79:y:2021:i:2:d:10.1007_s40300-021-00206-9
    DOI: 10.1007/s40300-021-00206-9
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    More about this item

    Keywords

    Inequality; Paradox; Gini index; Bonferroni index; Simpson’s paradox;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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