Given the problems with the Gini index ability to measure income inequality, I've looked to some alternate methods. These include average relative deviation from mean or median, both in absolute and logarithmic terms, and numerous measures of total difference within a population. One that performs well was the mean log difference. Unlike the mean difference (the numerator of the Gini) the mean log difference does not need normalization. And it is fairly easily explained - the geometric mean of the ratios between the income of any 2 people in the population.
One difficulty is calculation. In matrix form, the calculation is straightforward. Using a matrix is more challenging, however, when dealing with a list of numerous geographies.
No comments:
Post a Comment