Kashinath Sahoo

                     School of Economics and Management

 

This paper attempts to test the purity of Gini coefficient as a measuring index of income inequality. A modeling approach is used to test it where a hypothetical economy is free from inequality. Three steps to describe inequality are used. Between groups (inter), within group (intra) and overlapping problems of inequality have been discussed. Issue of a residual in the inequality measurement is implicitly analyzed. The principal finding is Gini coefficient is not free from biasness as a measuring index. If not meticulously implemented, it may yield results far from reality. Hence, utmost caution should be taken while using it, particularly while undertaking a decomposition study.

Acknowledgement: I sincerely thank Prof Zi Nai Li of School of Economics and Management for his valuable comments and suggestions.