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Why Measuring Inequality by the Variance Makes Sense from a Theoretical Point of View

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  • Satya R. Chakravarty

Abstract

The variance, which has many advantages as a measure of inequality, is a quadratic form in incomes. In this paper we develop a characterization of the variance by showing that among all quadratic forms in incomes, it is the only one that satisfies absolute inequality invariance, symmetry, the principle of transfers and the principle of population. A numerical illustration of several inequality indices, including the variance, is also presented in the paper.

Suggested Citation

  • Satya R. Chakravarty, 2001. "Why Measuring Inequality by the Variance Makes Sense from a Theoretical Point of View," Journal of Income Distribution, Ad libros publications inc., vol. 10(3-4), pages 6-6, September.
    • Handle: RePEc:jid:journl:y:2001:v:10:i:3-4:p:6-6
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/1290
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    Cited by:

    1. Kuan Xu, 2007. "U-Statistics and Their Asymptotic Results for Some Inequality and Poverty Measures," Econometric Reviews, Taylor & Francis Journals, vol. 26(5), pages 567-577.

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