Zenga’s New Index of Economic Inequality, Its Estimation, and an Analysis of Incomes in Italy
26 Pages Posted: 4 Sep 2009 Last revised: 1 Aug 2015
Date Written: September 2, 2009
Abstract
For at least a century academics and governmental researchers have been developing measures that would aid them in understanding income distributions, their differences with respect to geographic regions, and changes over time periods. It is a challenging area due to a number of reasons, one of them being the fact that different measures, or indices, are needed to reveal different features of income distributions. Keeping also in mind that the notions of ‘poor’ and ‘rich’ are relative to each other, M. Zenga has recently proposed a new index of economic inequality. The index is remarkably insightful and useful, but deriving statistical inferential results has been a challenge. For example, unlike many other indices, Zenga’s new index does not fall into the classes of L-, U-, and V -statistics. In this paper we derive desired statistical inferential results, explore their performance in a simulation study, and then employ the results to analyze data from the Bank of Italy’s Survey on Household Income and Wealth.
Keywords: Zenga index, lower conditional expectation, upper conditional expectation, confidence interval, Bonferroni curve, Lorenz curve, Vervaat process
JEL Classification: C13
Suggested Citation: Suggested Citation
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