Atkinson index

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The Atkinson index (also known as the Atkinson measure) is a measure of economic income inequality developed by Anthony Barnes Atkinson. The distinguishing feature of the Atkinson index is its ability to gauge movements in different segments of the income distribution.

The index can be turned into a normative measure by imposing a coefficient $\varepsilon$ to weight incomes. Greater weight can be placed on changes in a given portion of the income distribution by choosing $\varepsilon$ , the level of "inequality aversion", appropriately. The Atkinson index becomes more sensitive to changes at the lower end of the income distribution as $\varepsilon$ approaches 1. Conversely, as the level of inequality aversion falls (that is, as $\varepsilon$ approaches 0) the Atkinson becomes more sensitive to changes in the upper end of the income distribution.

The Atkinson index is defined as:

$A= \begin{cases} 1-\frac{1}{\mu}\left(\frac{1}{N}\sum_{i=1}^{N}y_{i}^{1-\varepsilon}\right)^{1/(1-\varepsilon)} & \mbox{for}\ \varepsilon \in \left[0,1\right) \\ 1-\frac{1}{\mu}\left(\prod_{i=1}^{N}y_{i}\right)^{1/N} & \mbox{for}\ \varepsilon=1, \end{cases}$

where $y i$ is individual income (i = 1, 2, ..., N) and $μ$ is the mean income.

[edit] References

Paul D. Allison, Measures of Inequality, American Sociological Review, 43 (December 1978), pp. 865-880, presents a technical discussion of the Atkinson measure's properties.
Income Inequality, 1947-1998, from the United States Census Office.

[edit] External links

Software:
- Free Online Calculator computes the Gini Coefficient, plots the Lorenz curve, and computes many other measures of concentration for any dataset
- Free Calculator: Online and downloadable scripts (Python and Lua) for Atkinson, Gini, and Hoover inequalities
- Users of the R data analysis software can install the "ineq" package which allows for computation of a variety of inequality indices including Gini, Atkinson, Theil.
- A MATLAB Inequality Package, including code for computing Gini, Atkinson, Theil indexes and for plotting the Lorenz Curve. Many examples are available.