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Characterizations of Lorenz curves and income distributions

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  • Rolf Aaberge

    ()
    (Research Department, Statistics Norway, Kongens gt. 6, P.b. 8131 Dep., N-0033 Oslo, Norway)

Abstract

The purpose of this paper is to propose and justify the use of a few measures of inequality for summarizing the basic information provided by the Lorenz curve. By exploiting the fact that the Lorenz curve can be considered analogous to a cumulative distribution function it is demonstrated that the moments of the Lorenz curve generate a convenient family of inequality measures, called the Lorenz family of inequality measures. In particular, the first few moments, which often capture the essential features of a distribution function, are proposed as the primary quantities for summarizing the information content of the Lorenz curve. Employed together these measures, which include the Gini coefficient, also provide essential information on the shape of the income distribution. Relying on the principle of diminishing transfers it is shown that the Lorenz measures, as opposed to the Atkinson measures, have transfer-sensitivity properties that depend on the shape of the income distribution.

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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 17 (2000)
Issue (Month): 4 ()
Pages: 639-653

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Handle: RePEc:spr:sochwe:v:17:y:2000:i:4:p:639-653

Note: Received: 20 July 1998/Accepted: 10 September 1999
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