Measuring inequality in society

Abstract

Governments develop policies to reduce unwarranted inequalities in society. Hence, there is a need for well-founded measures of inequality to monitor the impact of such policies. The discipline of economics has developed many such measures over the last century. Although these measures have focused on measuring inequality of incomes, they can be adapted to other economic variables. In this multidisciplinary, review paper, we present an introduction to measures of economic inequality from a mathematical perspective, and highlight their policy implications. This is an area in which mathematics and economics can contribute to justice and fairness in society.

Keywords:

• Inequality
• economics
• Lorenz
• Gini
• Atkinson
• Theil

Acknowledgements

We thank the organizers of the 4th SMTDA Conference, 1–4 June 2016, in Malta for the opportunity to present our work. We also thank two reviewers whose suggestions have led to improvements in the paper.