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On the interpretation of a concentration index of inequality

Author

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  • Xander Koolman

    (Department of Health Policy and Management, Erasmus University Medical Centre, Rotterdam, The Netherlands)

  • Eddy van Doorslaer

    (Department of Health Policy and Management, Erasmus University Medical Centre, Rotterdam, The Netherlands)

Abstract

This paper aims to add a more intuitive understanding to the concept of a concentration index for measuring relative inequality with an application of health-related measures by income. A new redistribution interpretation and an existing redistribution interpretation of the Gini are presented and applied to the concentration index. Both indicate the share of the total amount of any variable that needs redistributing in a particular way from rich to poor (or vice versa) to achieve a concentration index equal to zero. The characteristics of these redistribution schemes are compared. The paper also draws attention to the relationship between a concentration index, a correlation coefficient with relative income rank and a coefficient of variation of the variable of interest. These relationships are illustrated using data on inequality in dental care utilisation in European countries taken from the European Community Household Panel survey. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Xander Koolman & Eddy van Doorslaer, 2004. "On the interpretation of a concentration index of inequality," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 649-656.
  • Handle: RePEc:wly:hlthec:v:13:y:2004:i:7:p:649-656
    DOI: 10.1002/hec.884
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    References listed on IDEAS

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    1. Wagstaff, Adam & Paci, Pierella & van Doorslaer, Eddy, 1991. "On the measurement of inequalities in health," Social Science & Medicine, Elsevier, vol. 33(5), pages 545-557, January.
    2. Kondor, Yaakov, 1971. "An Old-New Measure of Income Inequality," Econometrica, Econometric Society, vol. 39(6), pages 1041-1042, November.
    3. Wagstaff, Adam & van Doorslaer, Eddy & Paci, Pierella, 1989. "Equity in the Finance and Delivery of Health Care: Some Tentative Cross-country Comparisons," Oxford Review of Economic Policy, Oxford University Press, vol. 5(1), pages 89-112, Spring.
    4. Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "Equity in the finance of health care: some further international comparisons1," Journal of Health Economics, Elsevier, vol. 18(3), pages 263-290, June.
    5. van Doorslaer, Eddy & Wagstaff, Adam & Bleichrodt, Han & Calonge, Samuel & Gerdtham, Ulf-G. & Gerfin, Michael & Geurts, Jose & Gross, Lorna & Hakkinen, Unto & Leu, Robert E., 1997. "Income-related inequalities in health: some international comparisons," Journal of Health Economics, Elsevier, vol. 16(1), pages 93-112, February.
    6. van Doorslaer, Eddy & Wagstaff, Adam & van der Burg, Hattem & Christiansen, Terkel & De Graeve, Diana & Duchesne, Inge & Gerdtham, Ulf-G & Gerfin, Michael & Geurts, Jose & Gross, Lorna, 2000. "Equity in the delivery of health care in Europe and the US," Journal of Health Economics, Elsevier, vol. 19(5), pages 553-583, September.
    7. Blackburn, McKinley L., 1989. "Interpreting the magnitude of changes in measures of income inequality," Journal of Econometrics, Elsevier, vol. 42(1), pages 21-25, September.
    8. Kondor, Yaakov, 1975. "Value Judgements Implied by the Use of Various Measures of Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 21(3), pages 309-321, September.
    9. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
    10. Milanovic, Branko, 1997. "A simple way to calculate the Gini coefficient, and some implications," Economics Letters, Elsevier, vol. 56(1), pages 45-49, September.
    11. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
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