The Intensity and Shape of Inequality: The ABG Method of Distributional Analysis
Inequality is anisotropic: its intensity varies by income level. We here develop a new tool, the isograph, to focus on local inequality and illustrate these variations. This method yields three coefficients which summarize the shape of inequality: a main coefficient, Alpha, which measures inequality at the median, and two correction coefficients, Beta and Gamma, which pick up any differential curvature at the top and bottom of the distribution. The analysis of a set of 232 microdata samples from 41 different countries in the LIS datacenter archive allows us to provide a systematic overview of the properties of the ABG (Alpha Beta Gamma) coefficients, which are compared both to a set of standard indices (Atkinson indices, generalized entropy, Wolfson polarization, etc.) and the GB2 distribution. This method also provides a smoothing tool that reveals the differences in the shape of distributions (the strobiloid) and how these have changed over time.
|Date of creation:||Nov 2014|
|Publication status:||Published in The Review of Income and Wealth 62, no. 1 (2016): 52-68|
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