Measuring Inequality: Using the Geometric Mean/Arithmetic Mean Ratio

Guillermina Jasso

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Since unambiguous ranking of income distributions according to their degree of inequality is not always possible, choice of inequality measure must rest on the appropriateness of particular measures for particular substantive problems. This article provides a complete account of one measure of inequality, δ, defined, for x > 0, as the ratio of the geometric mean to the arithmetic mean-a measure that is closely linked to the sense of distributive justice. Its properties are summarized, and formulas reported for the effects of transfers and of location changes. Analytic expressions for δ for three classical probability distributions-the Pareto, Lognormal, and Rectangular families-are provided, and δ's behavior in within-family comparisons discussed. The measure δ's behavior in between-family comparisons is explored using a new procedure for bounding the zones of ambiguity in inequality comparisons. Finally, a newly obtained decomposition formula for δ is reported.

    Original languageEnglish (US)
    Pages (from-to)303-326
    Number of pages24
    JournalSociological Methods & Research
    Volume10
    Issue number3
    DOIs
    StatePublished - Feb 1982

    ASJC Scopus subject areas

    • Social Sciences (miscellaneous)
    • Sociology and Political Science

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