The Gini coefficient Basic conditions for measurement of inequality - PowerPoint PPT Presentation

The Gini coefficient

Basic conditions for measurement of inequality • Measures of (relative) inequality have to satisfy the following principles: • The Pigou-Dalton principle of transfers • The principle of scale invariance 2

  average of all pairwise income differences 1    G   2 mean income 1              X X X X X X   3 2 3 1 2 1 3  G 1     2 3 X X X 1 2 3 3

Example