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Article Excerpt
Abstract
The goal of measuring the existing concentration of an economic magnitude among the elements in which it is distributed has been over the past years one of the major worries in the economic statistics arena. Among all the concentration indexes, the Gini index has been applied to a greater extent. This study considers that the traditional Gini index definition, according to a wide array of introductory statistics textbooks, is only applicable in the case of unitary frequency distributions. When dealing with nonunitary frequency distributions, it is possible to convert them into unitary ones, allowing for the application of the Gini index. Nevertheless, it can be appreciated how laborious such a task will be in those cases where the number of elements of the distribution is of considerable magnitude. The aim of this paper is to avoid this handicap by presenting an alternative index, the E-index. (JEL C10)
Introduction
The measurement of the existing concentration among the elements in which an economic variable is distributed has been a major worry for economists over the last decades and is still a problem today. Because of that, there have been a wide array of concentration indexes developed, most of them having been constructed on the base of the well-known Lorenz-Seailles-Chatelain-Gini curve. Among them, the one that has been applied to a greater extent in the economic arena is the Gini index.
Although the Gini concentration index has been originally designed for measuring concentration when the frequency distribution is unitary, in practice this feature is not very commonly verified in the economic phenomena. In spite of that, there has been some profuse use of this Gini index for cases in which the frequency distribution is not unitary, leading to some misleading conclusions in respect of the concentration within an economic magnitude.
This article deals with an alternative formulation of the...
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