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Mis-measurement of inequality: a critical reflection and new insights

Author

Listed:
  • Fabio Clementi

    (University of Macerata)

  • Mauro Gallegati

    (Polytechnic University of Marche)

  • Lisa Gianmoena

    (University of Pisa)

  • Simone Landini

    (IRES Piemonte, Socio-Economic Research Institute of Piedmont)

  • Joseph E. Stiglitz

    (Columbia University)

Abstract

This article documents that the Gini index is an insufficient measure of inequality and, according to the traditional logic of interpretation, that it may lead to incorrect deductions. Since, apart from concentration, it cannot grasp other relevant features of inequality like heterogeneity and asymmetry—which, beyond its intensity, allow for considering the direction of inequality too—we suggest using the less known Zanardi index of asymmetry of the Lorenz curve as an appropriate measure of inequality. Our findings are supported with estimates from the Luxembourg Income Study Database.

Suggested Citation

  • Fabio Clementi & Mauro Gallegati & Lisa Gianmoena & Simone Landini & Joseph E. Stiglitz, 2019. "Mis-measurement of inequality: a critical reflection and new insights," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 891-921, December.
    • Handle: RePEc:spr:jeicoo:v:14:y:2019:i:4:d:10.1007_s11403-019-00257-2
    DOI: 10.1007/s11403-019-00257-2
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    Cited by:

    1. Joongyang Park & Youngsoon Kim & Ae-Jin Ju, 2021. "Measuring income inequality based on unequally distributed income," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(2), pages 309-322, April.
    2. Grachev, Gennady A., 2022. "Size distribution of states, counties, and cities in the USA: New inequality form information," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 592(C).
    3. Mario Schlemmer, 2021. "Including the asymmetry of the Lorenz curve into measures of economic inequality," Papers 2108.03623, arXiv.org, revised Sep 2022.
    4. McMahon, James, 2022. "Star Power and Risk. A Political Economic Study of Casting Trends in Hollywood," Working Papers on Capital as Power 2022/01, Capital As Power - Toward a New Cosmology of Capitalism.

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    More about this item

    Keywords

    Income inequality; Gini index; Concentration; Lorenz curve asymmetry; Zanardi index;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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