Measuring regional inequality: to weight or not to weight?

ABSTRACT

Measuring regional inequality: to weight or not to weight? Spatial Economic Analysis. When estimating regional inequality, many economists use inequality indices weighted by regions’ proportion of the national population. Although this approach is widespread, its adequacy has not received attention in the regional science literature. This paper proves that such an approach is conceptually inconsistent, yielding an estimate of interpersonal inequality among the whole population of the country rather than an estimate of regional inequality. Nevertheless, as a measure of interpersonal inequality, such an estimate is very rough (even misleading) and does not always have an intuitive interpretation. Moreover, population-weighted inequality indices do not meet the requirements for an adequate measure of inequality.

KEYWORDS:

• inequality index
• weighting by population
• Williamson coefficient of variation
• inequality axioms

JEL:

• D31
• D63
• R10

ACKNOWLEDGEMENTS

The author is greatly indebted to Paul Elhorst, Editor-in-Chief, and three anonymous referees for helpful comments and suggestions.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author.

ORCID

Konstantin Gluschenko http://orcid.org/0000-0003-1209-3809