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Showing posts with label income distribution. Show all posts
Showing posts with label income distribution. Show all posts

2015-06-30

A better inequality measure than Gini is needed

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.

2012-06-19

An income loan for younger people?

Comments on Tony Makin "Beware politics of envy when considering ways to equalise incomes", 19/06/2012, http://www.theaustralian.com.au/national-affairs/opinion/beware-politics-of-envy-when-considering-ways-to-equalise-incomes/story-e6frgd0x-1226399149922
Assume Makin's argument that income redistribution to younger people is inter-generational unfair, maybe there should be income loans that can be repaid in the future when their income exceeds a set level, similar to the HECS in nature, to younger people in need.

2011-08-28

Gini coefficients and growth effect

comments on Cao Xin "China: The question of income distribution", 28/08/2011, http://www.eastasiaforum.org/2011/08/27/the-question-of-income-distribution/
I need to state that I am not an expert on income distribution both on time series and on cross countries. I was wondering, however, whether economic/income growth should be taken into account to judge income distribution in terms of Gini coefficients.
When two economies are having very different growths, the same level or change in their Gini coefficients may have different implications for the disadvantaged in their respective nations/peoples.
This could be a very interesting empirical research topic to see if growth has an impact or not.