Axioms and Intuitions about Societal Inequality

What does the Gini Coefficient Measure?

Abstract

We show that Corrado Gini’s “concentration ratio” is an informative measure of experienced inequality that (as he pointed out)  varies from one (his “maximum concentration”) to zero (“minimum concentration”), a feature that does not hold (except in infinite populations) for the measure advocated in the contribution to this symposium by our colleague, Debraj Ray.  Through a social network representation of inequality and  a series of examples, we clarify the differing intuitions about the nature of inequality that alternative measures of inequality capture.