Measuring Inequality: The Axiomatic Approach

Abstract

An index of inequality is a summary statistic of the dispersion of incomes. Indices of inequality are employed for evaluating a particular income distribution and for comparing different distributions. The typical questions addressed along these lines are: (i) How has inequality in region A changed over time ? (ii) Is inequality in region A greater than that in region B? (iii) Is the pre-tax income distribution more unequal than the post-tax distribution ? (iv) What are the major sources of inequality in region A? (v) Given any partitioning of the population, what are the contributions of ``within-group'' and ``between-group'' components of inequality?