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The Gini Coefficient and Personal Inequality Measurement

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  • James Davies

Abstract

The Gini coefficient is based on the sum of pairwise income differences. For an individual, differences vis-à-vis poorer people represent advantage, and those versus richer people deprivation. Any weighted average of deprivation and advantage generates a “Gini admissible” personal inequality index. The mean value of such an index across individuals equals the Gini coefficient. Properties of the personal indexes explain the differing sensitivity of the Gini coefficient to inequality in various ranges of the income distribution. Applications to the Kuznets transformation in developing countries, to polarization in advanced countries and to broad increases or decreases in income dispersion are explored.

Suggested Citation

  • James Davies, 2016. "The Gini Coefficient and Personal Inequality Measurement," CESifo Working Paper Series 5961, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5961
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    References listed on IDEAS

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    1. Conchita D’Ambrosio & Joachim Frick, 2007. "Income Satisfaction and Relative Deprivation: An Empirical Link," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 497-519, May.
    2. Conchita D'Ambrosio & Joachim R. Frick, 2012. "Individual Wellbeing in a Dynamic Perspective," Economica, London School of Economics and Political Science, vol. 79(314), pages 284-302, April.
    3. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
    4. Cojocaru, Alexandru, 2014. "Fairness and inequality tolerance: Evidence from the Life in Transition Survey," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 590-608.
    5. David A. Green & Benjamin M. Sand, 2015. "Has the Canadian labour market polarized?," Canadian Journal of Economics, Canadian Economics Association, vol. 48(2), pages 612-646, May.
    6. Yitzhaki, Shlomo, 1982. "Relative deprivation and economic welfare," European Economic Review, Elsevier, vol. 17(1), pages 99-113.
    7. Shlomo Yitzhaki, 1979. "Relative Deprivation and the Gini Coefficient," The Quarterly Journal of Economics, Oxford University Press, vol. 93(2), pages 321-324.
    8. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, Elsevier.
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    Cited by:

    1. Andrew E. Clark & Conchita D’Ambrosio, 2017. "Living conditions and well-being: Evidence from African countries," WIDER Working Paper Series 209, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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