Linear Measures, the Gini Index, and The Income-Equality Trade-off
The paper provides an axiomatization of linear inequality measures as a representation of a binary relation on the subspace of income profiles having the same total income. Interpreting the binary relation as a preferences (of, say, a policymaker), we extend the axioms to the whole space of income profiles, and find that they characterize linear social evaluation functions. The axiomatiziation seems to suggest that a policymaker who has a linear measure of inequality on a subspace should have a linear evaluation on the whole space. In particular, we find that an extension of the preferences reflected in the Gini index to the whole space is represented by a linear combination of total income and the Gini index.
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- Sheshinski, Eytan, 1972. "Relation between a social welfare function and the gini index of income inequality," Journal of Economic Theory, Elsevier, vol. 4(1), pages 98-100, February.
- Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July.
- Schmeidler, David, 1989.
"Subjective Probability and Expected Utility without Additivity,"
Econometric Society, vol. 57(3), pages 571-87, May.
- David Schmeidler, 1989. "Subjective Probability and Expected Utility without Additivity," Levine's Working Paper Archive 7662, David K. Levine.
- Ebert, Udo, 1987. "Size and distribution of incomes as determinants of social welfare," Journal of Economic Theory, Elsevier, vol. 41(1), pages 23-33, February.
- Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April.
- Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
- Gilboa, Itzhak, 1987. "Expected utility with purely subjective non-additive probabilities," Journal of Mathematical Economics, Elsevier, vol. 16(1), pages 65-88, February.
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