The Gini Coefficient and Personal Inequality Measurement

The Gini coefficient is based on the sum of pairwise income differences. For an individual, differences vis-à-vis poorer people represent advantage, and those versus richer people deprivation. Any weighted average of deprivation and advantage generates a “Gini admissible” personal inequality index. The mean value of such an index across individuals equals the Gini coefficient. Properties of the personal indexes explain the differing sensitivity of the Gini coefficient to inequality in various ranges of the income distribution. Applications to the Kuznets transformation in developing countries, to polarization in advanced countries and to broad increases or decreases in income dispersion are explored.