Development Economics (L3).pptVIP

Development Economics (L3) Mozaffar Qizilbash Measures of Inequality (1) Measures of inequality are sometimes broadly split into ‘objective’ and ‘normative’ measures; they can be income based or look at other factors (e.g. multi-dimensional) Consider distributions of income over persons, i=1,…, n. Let yi be the income of person i. Measures of Inequality (2) The mean is then: (∑yi)/n=μ The range is: E= (max yi-min yi)/μ Total equality is where E=o; and complete inequality where E=n. Problems with this measure: ignores points between the extremes; and can fail to meet the Pigou-Dalton condition