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On the capacity of the Gini index to represent income distributions

Author

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  • Yang Liu

    (George Washington University)

  • Joseph L. Gastwirth

    (George Washington University)

Abstract

Almost all governmental and international agencies use the Gini index to summarize income inequality in a nation or the world. The index has been criticized because it can have the same value for two different distributions. It will be seen that other commonly used summary measures of inequality are subject to the same criticism. The Gini index has the advantage that it is able to distinguish between two distributions that have identical integer valued generalized entropy measures. Because no single measure can fully summarize a distribution, researchers should consider combining the Gini index with another measure appropriate for the topic being studied.

Suggested Citation

  • Yang Liu & Joseph L. Gastwirth, 2020. "On the capacity of the Gini index to represent income distributions," METRON, Springer;Sapienza Università di Roma, vol. 78(1), pages 61-69, April.
    • Handle: RePEc:spr:metron:v:78:y:2020:i:1:d:10.1007_s40300-020-00164-8
    DOI: 10.1007/s40300-020-00164-8
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    References listed on IDEAS

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    1. Giovanni Maria Giorgi & Chiara Gigliarano, 2017. "The Gini Concentration Index: A Review Of The Inference Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 31(4), pages 1130-1148, September.
    2. Lidia Ceriani & Paolo Verme, 2012. "The origins of the Gini index: extracts from Variabilità e Mutabilità (1912) by Corrado Gini," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(3), pages 421-443, September.
    3. Bogdan Oancea & Dan Pirjol, 2019. "Extremal properties of the Theil and Gini measures of inequality," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(2), pages 859-869, March.
    4. James Foster & Michael Wolfson, 2010. "Polarization and the decline of the middle class: Canada and the U.S," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(2), pages 247-273, June.
    5. Gastwirth, Joseph L, 1972. "The Estimation of the Lorenz Curve and Gini Index," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 306-316, August.
    6. Gastwirth, Joseph L, 1971. "A General Definition of the Lorenz Curve," Econometrica, Econometric Society, vol. 39(6), pages 1037-1039, November.
    7. James Foster & Michael Wolfson, 2014. "Erratum to: Polarization and the decline of the middle class: Canada and the U.S," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(3), pages 435-437, September.
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