Multidimensional Economic Dispersion Index and Application

Yifan Xia, Ling Zhang and Iris L. Li

Journal of Business & Economic Statistics, 2021, vol. 39, issue 3, 729-740

Abstract: The Gini index is widely used in economics as a measure of inequality with respect to income or wealth. However, it is not applicable when we consider evaluating the inequality level using more than one social resources. To comprehensively evaluate the social inequality level, we propose a multidimensional economic dispersion index (MEDI) based on the Lorenz hyper-surface determined by the distributions of multiple social resources. The MEDI is a natural extension of the Gini index and is equivalent to the Gini index in the presence of only one resource. We propose an estimator for the MEDI with good statistical properties and develop an algorithm to calculate the estimate. We further apply the MEDI for an empirical analysis to evaluate the social inequality level of Chinese provincial capitals. The results reveal some interesting phenomena of Chinese social inequalities and also demonstrate how the MEDI captures more information in complex economic situations than the classical Gini index.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:taf:jnlbes:v:39:y:2021:i:3:p:729-740

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DOI: 10.1080/07350015.2020.1730185

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