IDEAS home Printed from https://ideas.repec.org/a/taf/nzecpp/v50y2016i2p177-192.html
   My bibliography  Save this article

Interpreting inequality measures and changes in inequality

Author

Listed:
  • John Creedy

Abstract

This paper explores, in the context of the Atkinson inequality measure, attempts to make interpretations of orders of magnitude transparent. One suggestion is that the analogy of sharing a cake among a very small number of people provides a useful intuitive description for people who want some idea of what an inequality measure ‘actually means’. In contrast with the Gini measure, for which a simple ‘cake-sharing’ result is available, the Atkinson measure requires a nonlinear equation to be solved. Comparisons of ‘excess shares’ (the share obtained by the richer person in excess of the arithmetic mean) for a range of assumptions are provided. The implications for the ‘leaky bucket’ experiments are also examined. An additional approach is to obtain the ‘pivotal income’, above which a small increase for any individual increases inequality. The properties of this measure for the Atkinson index are also explored.

Suggested Citation

  • John Creedy, 2016. "Interpreting inequality measures and changes in inequality," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(2), pages 177-192, August.
    • Handle: RePEc:taf:nzecpp:v:50:y:2016:i:2:p:177-192
    DOI: 10.1080/00779954.2015.1045929
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00779954.2015.1045929
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00779954.2015.1045929?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. S. Subramanian, 2002. "An Elementary Interpretation of the Gini Inequality Index," Theory and Decision, Springer, vol. 52(4), pages 375-379, June.
    2. Alejandro Corvalan, 2014. "The Impact of a Marginal Subsidy on Gini Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 596-603, September.
    3. Hoffmann, Rodolfo, 2001. "Effect of the rise of a person's income on inequality," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 21(2), November.
    4. Peter Lambert & Giuseppe Lanza, 2006. "The effect on inequality of changing one or two incomes," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 253-277, December.
    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    6. Yoram Amiel & John Creedy & Stan Hurn, 1999. "Measuring Attitudes Towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
    7. Luisa Tibiletti & S. Subramanian, 2015. "Inequality Aversion and the Extended Gini in the Light of a Two-person Cake-sharing Problem," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 16(2), pages 237-244, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Creedy, John, 2019. "The Atkinson Inequality Measure and Inequality Aversion," Working Paper Series 8015, Victoria University of Wellington, Chair in Public Finance.
    2. Creedy, John, 2019. "The Atkinson Inequality Measure and Inequality Aversion," Working Paper Series 20918, Victoria University of Wellington, Chair in Public Finance.
    3. Creedy, John, 2021. "Comparing Income Distributions Using Atkinson’s Measure of Inequality," Working Paper Series 9469, Victoria University of Wellington, Chair in Public Finance.
    4. Guillaume Saint-Jacques & Amir Sepehri & Nicole Li & Igor Perisic, 2020. "Fairness through Experimentation: Inequality in A/B testing as an approach to responsible design," Papers 2002.05819, arXiv.org.
    5. John Creedy, 2023. "Distributional Comparisons Using the Gini Inequality Measure," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(4), pages 538-550, December.
    6. John Creedy, 2023. "Comparing Income Distributions Using Atkinson's Measure of Inequality," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(1), pages 141-155, March.
    7. Rehan Akram & Nasir Ayub & Imran Khan & Fahad R. Albogamy & Gul Rukh & Sheraz Khan & Muhammad Shiraz & Kashif Rizwan, 2021. "Towards Big Data Electricity Theft Detection Based on Improved RUSBoost Classifiers in Smart Grid," Energies, MDPI, vol. 14(23), pages 1-17, December.
    8. Creedy, John, 2021. "Distributional Comparisons Using the Gini Inequality Measure," Working Paper Series 9471, Victoria University of Wellington, Chair in Public Finance.
    9. Alinaghi, Nazila & Creedy, John & Gemmell, Norman, 2022. "Income Inequality and the Accounting Period in New Zealand: Evidence from Administrative Data," Working Paper Series 21899, Victoria University of Wellington, Chair in Public Finance.
    10. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 21109, Victoria University of Wellington, Chair in Public Finance.
    11. Gemmell, Norman, 2021. "Economic Lessons for Tax Policy Advisers," Working Paper Series 9463, Victoria University of Wellington, Chair in Public Finance.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John Creedy, 2023. "Comparing Income Distributions Using Atkinson's Measure of Inequality," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(1), pages 141-155, March.
    2. Creedy, John, 2021. "Comparing Income Distributions Using Atkinson’s Measure of Inequality," Working Paper Series 9469, Victoria University of Wellington, Chair in Public Finance.
    3. Stanislaw Maciej Kot & Piotr Paradowski, 2024. "The Equally Distributed Equivalent Income as the Upper Limit of Poverty Lines," LIS Working papers 885, LIS Cross-National Data Center in Luxembourg.
    4. Laurence S. J. Roope, 2019. "Characterizing inequality benchmark incomes," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(1), pages 131-145, May.
    5. John Creedy & S. Subramanian, 2023. "Exploring A New Class of Inequality Measures and Associated Value Judgements: Gini and Fibonacci-Type Sequences," Sankhya B: The Indian Journal of Statistics, Springer;Indian Statistical Institute, vol. 85(1), pages 110-131, May.
    6. Diego C. Botassio & Rodolfo Hoffmann, 2020. "Measuring gender segregation," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(1), pages 25-47, April.
    7. Laurence S J Roope, 2021. "First estimates of inequality benchmark incomes for a range of countries," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-8, March.
    8. Ashantha Ranasinghe & Xuejuan Su, 2023. "When social assistance meets market power: A mixed duopoly view of health insurance in the United States," Economic Inquiry, Western Economic Association International, vol. 61(4), pages 851-869, October.
    9. Guido Erreygers & Roselinde Kessels, 2017. "Socioeconomic Status and Health: A New Approach to the Measurement of Bivariate Inequality," IJERPH, MDPI, vol. 14(7), pages 1-23, June.
    10. Casilda Lasso de la Vega & Christian Seidl, 2007. "The Impossibility of a Just Pigouvian," Working Papers 69, ECINEQ, Society for the Study of Economic Inequality.
    11. Maureen Cropper & Alan Krupnick & William Raich, 2016. "Preferences for Equality in Environmental Outcomes," NBER Working Papers 22644, National Bureau of Economic Research, Inc.
    12. John Creedy, 2005. "An In‐Work Payment with an Hours Threshold: Labour Supply and Social Welfare," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 367-377, December.
    13. Johansson-Stenman, Olof & Carlsson, Fredrik & Daruvala, Dinky, 2001. "Measuring Hypothetical Grandparents Preferences For Equality And Relative Standings," Working Papers in Economics 42, University of Gothenburg, Department of Economics.
    14. Camacho Cuena, Eva & Neugebauer, Tibor & Seidl, Christian, 2005. "Compensating justice beats leaky buckets: an experimental investigation," Economics Working Papers 2005-06, Christian-Albrechts-University of Kiel, Department of Economics.
    15. Santiago Burone & Martin Leites, 2021. "Self-centered and non-self-centered inequality aversion matter: Evidence from Uruguay based on an experimental survey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(2), pages 265-291, June.
    16. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute of Labor Economics (IZA).
    17. Guido Erreygers & Philip Clarke & Qiong Zheng, 2017. "On the measurement of socioeconomic inequality of health between countries," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(2), pages 175-193, June.
    18. Lambert, Peter J. & Millimet, Daniel L. & Slottje, Daniel, 2003. "Inequality aversion and the natural rate of subjective inequality," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1061-1090, May.
    19. Eva Camacho-Cuena & Tibor Neugebauer & Christian Seidl, 2007. "Leaky Buckets Versus Compensating Justice: An Experimental Investigation," Working Papers 74, ECINEQ, Society for the Study of Economic Inequality.
    20. Traub, Stefan & Seidl, Christian & Schmidt, Ulrich, 2003. "Lorenz, Pareto, Pigou: Who Scores Best? Experimental Evidence on Dominance Relations of Income Distributions," Economics Working Papers 2003-04, Christian-Albrechts-University of Kiel, Department of Economics.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:50:y:2016:i:2:p:177-192. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://www.tandfonline.com/RNZP20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.