Income Inequality Measurement: The Normative Approach

Abstract

This paper provides a survey of normative approaches to inequality measurement, to be published as a chapter in a volume on income inequality. We present general methods for deriving ethical inequality indexes from social-evaluation orderings such as the Atkinson-Kolm-Sen and Kolm procedures. Relative, absolute, and other index types are related to these general approaches. A discussion of ordinal indexes as well as numerically significant indexes is included. In addition, we discuss the decomposition of indexes into measures of intergroup and intragroup inequality.