Measuring Inequality

by Cowell, Frank

• ISBN13: 9780199594047
• ISBN10: 019959404X
• Edition: 3rd
• Format: Paperback
• Copyright: 2011-03-22
• Publisher: Oxford University Press

Summary

What do we mean by inequality comparisons? If the rich just get richer and the poor get poorer, the answer might seem easy. But what if the income distribution changes in a complicated way? Can we use mathematical or statistical techniques to simplify the comparison problem in a way that has economic meaning? What does it mean to measure inequality? Is it similar to National Income? Or a price index? Is it enough just to work out the Gini coefficient? Measuring Inequalitytackles these questions and examines the underlying principles of inequality measurement and its relation to welfare economics, distributional analysis, and information theory. The book covers modern theoretical developments in inequality analysis, as well as showing how the way we think about inequality today has been shaped by classic contributions in economics and related disciplines. Formal results and detailed literature discussion are provided in two appendices. The principal points are illustrated in the main text, using examples from US and UK data, as well as other data sources, and associated web materials provide hands-on learning. Measuring Inequalityis designed to appeal to both undergraduate and post-graduate students, and academic economists. Its emphasis on practical application means that it will also be useful to policy analysts and advisors.

Author Biography

Frank A. Cowell is Professor of Economics at the London School of Economics and Political Science, Editor of Economica, and Associate Editor of the Journal of Economic Inequality.

Table of Contents

List of Figures	p. xiii
List of Tables	p. xvii
First Principles	p. 1
A preview of the book	p. 3
Inequality of what?	p. 4
Inequality measurement, justice, and poverty	p. 7
Inequality and the social structure	p. 13
Questions	p. 14
Charting Inequality	p. 17
Diagrams	p. 18
Inequality measures	p. 24
Rankings	p. 31
From charts to analysis	p. 36
Questions	p. 37
Analysing Inequality	p. 39
Social welfare functions	p. 40
SWF-based inequality measures	p. 49
Inequality and information theory	p. 53
Building an inequality measure	p. 61
Choosing an inequality measure	p. 67
Summary	p. 72
Questions	p. 75
Modelling Inequality	p. 77
The idea of a model	p. 78
The lognormal distribution	p. 80
The Pareto distribution	p. 87
How good are the functional forms?	p. 95
Questions	p. 100
From Theory to Practice	p. 103
The data	p. 104
Computation of the inequality measures	p. 112
Appraising the calculations	p. 128
Shortcuts: fitting functional forms	p. 135
Interpreting the answers	p. 142
A sort of conclusion	p. 148
Questions	p. 149
Technical Appendix	p. 153
Overview	p. 153
Measures and their properties	p. 153
Functional forms of distribution	p. 156
Interrelationships between inequality measures	p. 163
Decomposition of inequality measures	p. 164
Negative incomes	p. 169
Estimation problems	p. 170
Using the website	p. 177
Notes on Sources and Literature	p. 178
Chapter 1	p. 178
Chapter 2	p. 180
Chapter 3	p. 183
Chapter 4	p. 187
Chapter 5	p. 190
Technical Appendix	p. 195
Bibliography	p. 197
Index	p. 225
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