DP13211 Inequality as experienced difference: A reformulation of the Gini coefficient
|Author(s):||Samuel Bowles, Wendy Carlin|
|Publication Date:||September 2018|
|Keyword(s):||Gini coefficient, inequality, Lorenz curve, relative mean difference|
|Programme Areas:||Public Economics, Development Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=13211|
We represent a population as a complete undirected network, the edges of which are the fundamental data on experienced disparities. This yields a Gini coefficient (for wealth, say) for finite populations that is based on the mean wealth difference between all pairs of individuals relative to the mean wealth, which we demonstrate is not the case for the conventional Lorenz curve representation and the algorithm widely-used to calculate it. Our method also provides simple and intuitive explanations of the effects on the Gini coefficient of changes in the wage share, the employment rate, and other macroeconomic and demographic variables.