Inequality
The three concepts of inequality defined
World inequality: clarifying concepts
Authors:
B. Milanovic
Publisher:
Princeton University Library, 2005
There are three concepts of world inequality that need to be sharply distinguished, as they are often confused. This report does just that.
The first concept is un-weighted international inequality. This concept takes country as the unit of observation, uses its income (or GDP) per capita, disregards its population, and thus compares all countries in the world as if they were the same size.
The second type of inequality is population weighted international inequality, where it is still assumed that everyone in a country receives the same income, but the number of representative individuals in each country reflects its population size.
The third concept, calculates inequality across all individuals in the world. The author contends that it is the true world income distribution as it treats, in principle, everybody the same.
When applied, how do these concepts differ? Using data from the fifty states of the USA, the author illustrate the differences between these three concepts of inequality.
