Comments on Tom Conley "Big P Political Economy - The Many Faces of Inequality and Poverty in Australia and the World", 29/06/2015
While the measure of inequality using the GINI coefficient is useful and also be informative, such a measure also has significant shortcomings particularly in a dynamic sense. A more comprehensive measure to reflect both static and dynamic situations or some complementing measures may be needed.
To capture some of the shortcomings of the Gini coefficient measure, one can ask the following question and attempt to answer it:
Do you wish to be 1% better off in a world/country of falling Gini coefficient where the average growth is less than 1%, or do you wish to be 5% better off in a world/country of rising Gini coefficient where the average growth is greater than 5%?
I think that most people are likely to prefer to be in the second situation as opposed to the first one.
If that proposition/supposition is correct, then it means that to simply use the Gini coefficient is problematic and we need to develop another measure to better reflect that.
I would suggest we need some measure of inequality that can also capture the dynamic growth in it. It should not be too difficult to develop such a new measure to better the current simple Gini coefficient.