Measuring inequality

  • GDP, which stands for Gross Domestic Product, measures the value of economic activity within a country.
  • GNI, which stands for Gross National Income, measures the level of wealth of the people of the country when all possible sources of income are considered.
  • GNI per capita.
  • HDI, which stands for Human Development Index, measures the standards living of a country. The standards living are, for instance, life expectancy at birth, mean years of schooling, etc.
  • IHDI, which stands for Inequality-adjusted Human Development Index, comprehends the repercussion of inequality that an average person faces in the economy.
  • MPI, which stands for Global Multidimensional Poverty Index, shows how poverty touches individuals in the economy.

Representing inequality

  • The Lorenz curve
  • The Gini coefficient $\rm G=\dfrac{\text { area } A}{\operatorname{area}(A+B)}$
  • $\rm G$ measures the inequality between values of a frequency distribution, mostly income levels. Gini coefficient is a measure of inequality of income or wealth within a country.
  • $\rm G$ is included between $0$ and $1$ and is expressed in percent.
  • Interpretation: the inequality is all the stronger as the Gini coefficient is high (close to $1$).

Reducing inequality

Governments interventions to tackle inequalities and poverty:

  • Progressive taxation
  • Social expenditures
  • Health care expenditures
  • Minimum wage
  • Setting limits for banks