Economics at your fingertips  

The Squared Coefficient of Variation as an Inequality Index: A Social Evaluation Characterization

Asis Banerjee

Review of Economics & Finance, 2015, vol. 5, 45-54

Abstract: The squared coefficient of variation (C2) is a well-known index of relative inequality. However, the existing economic theory of inequality does not contain a characterization of this index in terms of the properties of the underlying social evaluation function. It is well-known that if the Atkinson-Kolm-Sen (AKS) index of relative inequality derived from a social evaluation relation defined on a space of distributions is C2, it is necessary that the relation satisfies a ¡®transfer neutrality¡¯ condition. This paper obtains a complete characterization of the index by proving the converse. It is shown that, in the presence of other standard assumptions on the social evaluation relation, transfer neutrality implies a particular social evaluation function and that the corresponding AKS relative inequality index coincides with C2. This inequality index and the corresponding social evaluation function is then applied in a relatively unexplored area of empirical research. It is shown that in India inequality (as measured by C2) in the distribution of a variable that indicates the width of accessibility of bank credit increased in the ten or so years following the introduction of economic reforms in the early 1990s. At the same time there was an increase in the average value of this indicator. The question, therefore, arises as to the direction of change of over-all social welfare from this particular attribute. The social evaluation underlying C2 implies that, on balance, there was a decline in the welfare of the country in this respect.

Keywords: Coefficient of variation; Social evaluation; Transfer neutrality; Bank credit (search for similar items in EconPapers)
JEL-codes: D63 D31 I30 C69 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada

Access Statistics for this article

Review of Economics & Finance is currently edited by H. Carlson

More articles in Review of Economics & Finance from Better Advances Press, Canada 17 Alton Towers Circle, Unit 101 Toronto, ON, M1V3L8, Canada.
Bibliographic data for series maintained by Carlson ().

Page updated 2018-07-29
Handle: RePEc:bap:journl:150304