Para depositar en Docta Complutense, identifícate con tu correo @ucm.es en el SSO institucional: Haz clic en el desplegable de INICIO DE SESIÓN situado en la parte superior derecha de la pantalla. Introduce tu correo electrónico y tu contraseña de la UCM y haz clic en el botón MI CUENTA UCM, no autenticación con contraseña.
 

A New Inequality Measure that is Sensitive to Extreme Values and Asymmetries

Loading...
Thumbnail Image

Official URL

Full text at PDC

Publication date

2017

Advisors (or tutors)

Editors

Journal Title

Journal ISSN

Volume Title

Publisher

Facultad de Ciencias Económicas y Empresariales. Instituto Complutense de Análisis Económico (ICAE)
Citations
Google Scholar

Citation

Abstract

There is a vast literature on the selection of an appropriate index of income inequality and on what desirable properties such a measure (or index) should contain. The Gini index is, of course, the most popular. There is a concurrent literature on the use of hypothetical statistical distributions to approximate and describe an observed distribution of incomes. Pareto and others observed early on that incomes tend to be heavily right-tailed in their distribution. These asymmetries led to approximating the observed income distributions with extreme value hypothetical statistical distributions, such as the Pareto distribution. But these income distribution functions (IDFs) continue to be described with a single index (such as the Gini) that poorly detects the extreme values present in the underlying empirical IDF. This paper introduces a new inequality measure to supplement, but not to replace, the Gini that measures more accurately the inherent asymmetries and extreme values that are present in observed income distributions. The new measure is based on a third-order term of a Legendre polynomial from the logarithm of a share function (or Lorenz curve). We advocate using the two measures together to provide a better description of inequality inherent in empirical income distributions with extreme values.

Research Projects

Organizational Units

Journal Issue

Description

UCM subjects

Keywords