Exploring A New Class of Inequality Measures and Associated Value Judgements: Gini and Fibonacci-Type Sequences

John Creedy and S. Subramanian

No 25477, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: This paper explores a single-parameter generalization of the Gini inequality measure. Taking the starting point to be the Borda-type social welfare function, which is known to generate the standard Gini measure, in which incomes (in ascending order) are weighted by their inverse rank, the generalisation uses a class of non-linear functions. These are based on the so-called ‘metallic sequences’ of number theory, of which the Fibonacci sequence is the best-known. The value judgements implicit in the measures are explored in detail. Comparisons with other well-known Gini measures, along with the Atkinson measure, are made. These are examined within the context of the famous ‘leaky bucket’ thought experiment, which concerns the maximum leak that a judge is prepared to tolerate, when making an income transfer from a richer to a poorer person. Inequality aversion is thus viewed in terms of being an increasing function of the leakage that is regarded as acceptable.

Keywords: Income inequality; Gini coefficient; Extensions of Gini; Social welfare functions; Equally distributed equivalent income; Atkinson; Inequality aversion; Value judgements; Efficiency and equity; Leaky bucket experiment (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-upt
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https://ir.wgtn.ac.nz/handle/123456789/25477

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Journal Article: Exploring A New Class of Inequality Measures and Associated Value Judgements: Gini and Fibonacci-Type Sequences (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcpf:25477

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