Income inequality and conflicts: A new Gini decomposition analysis

There has been little research examining how income inequality may or may not contribute to the “grievance” aspect of conflict. For the most part, the measure used is the traditional Gini index, which is suitable to reflect vertical inequality (VI) rather than horizontal inequality (HI). Calculating HI requires the ability to decompose inequality indices, especially the Gini index, into a within-subgroup component and a between-subgroup component. There exists a long-standing stream of literature discussing how to decompose the Gini index. This article discusses the shortcomings of existing Gini decomposition methods and proposes a novel method that divides the Gini index into within-subgroup and across-subgroup components. This novel method is then applied to the case of Thailand in the years 2009–2017. The differences in the two components derived from the method of this article and those of existing methods are large. In addition, the HI measure this article introduces is also large relative to non-Gini measures such as the Theil and Shorrocks indices. Therefore conflict-related papers that include an existing Gini decomposition and HI measure among their independent variables may wish to test their models with those of this article and other measures—to examine if the results are consistent and to mitigate a risk of misleading policymakers.