- #1
- 33,482
- 20,049
This doesn't really fit in any other place. I'm interested in alternatives to the Gini coefficient for studying inequality, such as were discussed in this thread and this one.
What do I see as the shortcomings of Gini? By example: in Lower Slobovia, everyone has nothing. It's a perfectly equal society, so Gini = 0. In Upper Slobovia, on the other hand, everyone is wealthy - each citizen has exactly one million quatloos. Again, Gini = 0. Now, Upper and Lower Slobovia merge to form Greater Slobovia, and during this merger, each former Upper Slobovian gives 1/3 of his wealth to a corresponding Lower Slobovian. The result? Inequality actually goes up. Gini is now, if I did the math right, 0.17. But inequality in each former region is still zero.
The actual practical problem is when comparing a part of a polity with the whole: a city or state with the nation, or a single nation with "Europe". People do this comparison all the time, but as the example above shows it's not entirely valid. There's a sort of scale dependency.
It would also be helpful for an alternative also to have a clear and simple relationship between income inequality and wealth inequality - just as income and wealth have a clear relationship. (One being the derivative of the other)
Are there less flawed alternatives out there?
What do I see as the shortcomings of Gini? By example: in Lower Slobovia, everyone has nothing. It's a perfectly equal society, so Gini = 0. In Upper Slobovia, on the other hand, everyone is wealthy - each citizen has exactly one million quatloos. Again, Gini = 0. Now, Upper and Lower Slobovia merge to form Greater Slobovia, and during this merger, each former Upper Slobovian gives 1/3 of his wealth to a corresponding Lower Slobovian. The result? Inequality actually goes up. Gini is now, if I did the math right, 0.17. But inequality in each former region is still zero.
The actual practical problem is when comparing a part of a polity with the whole: a city or state with the nation, or a single nation with "Europe". People do this comparison all the time, but as the example above shows it's not entirely valid. There's a sort of scale dependency.
It would also be helpful for an alternative also to have a clear and simple relationship between income inequality and wealth inequality - just as income and wealth have a clear relationship. (One being the derivative of the other)
Are there less flawed alternatives out there?