GINI IN A NEW BOX (WIP - November 6th, 2015)
To give you a brief overview of this article, we need to understand what GINI index is, how it is calculated, applied, and what the value represents? I will go into detail in this article. Prior to sharing those aspects in this article, I would like to capture the key focus of this analysis in this paragraph. Gini index, which provides a way to measure dispersion in wealth, and was invented by Gini in 1912, has been in use for more than 50 years now even after Gini's death in 1965. Gini index calculation builds onto Max Lorenzian work published in 1905, and utilizes integral calculus. Though the method of measurement has been widely utilized, and provides an useful way to understand dispersion in wealth, it does not provide an apples to apples comparison while comparing two countries. For example, there can be countries with similar gini coefficients, but a totally different distribution in per capita income, population, and inflation rates to name a few. For that reason, it is important to consider additional tools to measure dispersion of wealth to complement Gini coefficient that takes into account some of the variables mentioned above. While discussing gini coefficient, it is also important to consider the definition of Human Poverty Index, and how it stacks up to relative increase in prices for key items such as, house prices, rent, food, education, healthcare to name a few. More soon -
Note: To my best knowledge, there is nothing out there that compares wealth dispersion between countries in more equivalent terms, and which takes into account some of the variables cited above. There are extensive studies out there looking within country trends, and using Gini coefficient. Researchers at Cambridge are also working on utilizing Palma ratio to measure wealth dispersion. All these details will be provided in this article.
- References will be added at the end