What is it about?
The Gini index is the most commonly used measure of inequality but a common misconception is that it is overly sensitive to changes in the middle. The article demonstrates that this is incorrect and that changes in the extreme regions or additional increments received by the lowest or highest regions of the income disribution have a larger effect on the Gini than similar changes in the middle.
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Why is it important?
Publications of the World Bank, United States and Australia Census Bureaus and well-known economists, e.g. Picketty and Frachaire have noted that the Gini index is more sensitive to changes in the middle of the distribution and similar ones in the upper and lower regions. This article corrects this misunderstanding and provides formulas for assessing the effect of transfers or increments on the index.
Perspectives
It is interesting that a misunderstanding about the properties of a well-established statistical measure of inequality, first published in the 1970's, could remain uncorrected in the literature for a long time.
Professor Joseph L Gastwirth
George Washington University
Read the Original
This page is a summary of: Is the Gini Index of Inequality Overly Sensitive to Changes in the Middle of the Income Distribution?, Statistics and Public Policy, January 2017, Taylor & Francis,
DOI: 10.1080/2330443x.2017.1360813.
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