Comparisons of utility inequality and income inequality
Department
Economics, Finance and Quantitative Analysis
Document Type
Article
Publication Date
5-1-2019
Abstract
A simple theoretical model is developed and analyzed to investigate the possible relationships between income inequality and utility inequality. Measuring utility inequality and income inequality with Gini coefficients, it is argued that there need not be any relation whatsoever between the realized levels of inequality in these two distinct outcomes. That is, a high level of income inequality could result when there is either equally high or absolutely no utility inequality, and a low level of income inequality could result when there is either no utility inequality or a relatively high degree of utility inequality. Consequently, if what we are actually concerned with is inequality in utility or well-being, observations on income inequality might be meaningless.
Journal Title
Economics Letters
Journal ISSN
0165-1765
Volume
178
First Page
18
Last Page
20
Digital Object Identifier (DOI)
10.1016/j.econlet.2019.02.015