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Inequality as experienced difference: A reformulation of the Gini coefficient

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  • Carlin, Wendy
  • Bowles, Samuel

Abstract

We represent a population as a complete undirected network, the edges of which are the fundamental data on experienced disparities. This yields a Gini coefficient (for wealth, say) for finite populations that is based on the mean wealth difference between all pairs of individuals relative to the mean wealth, which we demonstrate is not the case for the conventional Lorenz curve representation and the algorithm widely-used to calculate it. Our method also provides simple and intuitive explanations of the effects on the Gini coefficient of changes in the wage share, the employment rate, and other macroeconomic and demographic variables.

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  • Carlin, Wendy & Bowles, Samuel, 2018. "Inequality as experienced difference: A reformulation of the Gini coefficient," CEPR Discussion Papers 13211, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13211
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    References listed on IDEAS

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    1. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
    2. Sen, Amartya, 1997. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198292975.
    3. Matthew O. Jackson & Brian W. Rogers & Yves Zenou, 2017. "The Economic Consequences of Social-Network Structure," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 49-95, March.
    4. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April.
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    2. Sarkar, Sandip, 2023. "Gini decomposition: An inequality of opportunity perspective," Economics Letters, Elsevier, vol. 223(C).
    3. Amy E Thompson & Gary M Feinman & Keith M Prufer, 2021. "Assessing Classic Maya multi-scalar household inequality in southern Belize," PLOS ONE, Public Library of Science, vol. 16(3), pages 1-30, March.
    4. Meng Tian & Lei Yuan & Renzhong Guo & Yongsheng Wu & Xiaojian Liu, 2022. "Evaluations of Spatial Accessibility and Equity of Multi-Tiered Medical System: A Case Study of Shenzhen, China," IJERPH, MDPI, vol. 19(5), pages 1-18, March.
    5. Xiaogeng Xu & Satu Metsälampi & Michael Kirchler & Kaisa Kotakorpi & Peter Hans Matthews & Topi Miettinen, 2023. "Which income comparisons matter to people, and how? Evidence from a large field experiment," Working Papers 2023-05, Faculty of Economics and Statistics, Universität Innsbruck.

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    More about this item

    Keywords

    Inequality; Gini coefficient; Relative mean difference; Lorenz curve;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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