Inequity Aversion, Welfare Measurement and the Gini Index

Integrating individual inequity aversion into a utilitarian social welfare function, we derive a simple welfare measure which comprises both GDP and income inequality as measured by the Gini-index. The provided theoretical link between inequity aversion (popular in behavioural microeconomics) and the Gini-index (used in macroeconomic evaluations) strongly suggest that both measures indeed reflect the same empirically relevant aspect of reality, thereby giving substantial further warrant to either of them. As a kind of side effect, we provide a (so far missing) theoretical foundation for the Gini-Index

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Year of publication:	2018
Authors:	Schmidt, Ulrich
Other Persons:	Wichardt, Philipp C. (contributor)
Publisher:	[2018]: [S.l.] : SSRN
Subject:	Gini-Koeffizient \| Gini coefficient \| Theorie \| Theory \| Einkommensverteilung \| Income distribution \| Wohlfahrtsökonomik \| Welfare economics \| Sozialer Indikator \| Social indicator \| Wohlfahrtsanalyse \| Welfare analysis

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