Measuring Income Inequality and Insufficiency: The Philippine Experience

Percival S. Gabriel

Published: September 2017

Income inequality is normally illustrated by the Lorenz curve and measured by the Gini coefficient and other variant measures. Standard estimates exclude what is left of income when expenditure is subtracted and some groups have income insufficiency, income sufficiency or a surfeit of income—income sufficiency. This paper presents an income insufficiency index (Uiix) using the technique employed by Lorenz to calculate regions of surplus and the area of deficits, dividing them to create a new ratio. The new index is compared with standard measures of inequality using income to add more welfare substance using historical data from the Philippines from 1961 to 2012.

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