‘Williamson’s Fallacy’ in Estimation of Inter-Regional Inequality

Gluschenko, Konstantin (2015): ‘Williamson’s Fallacy’ in Estimation of Inter-Regional Inequality.

Abstract

While estimating regional inequality, many economists use inequality indices weighted by regions’ shares in the national population. Despite this approach is widespread, its adequacy has not received attention in the regional science literature. This paper proves that such approach is conceptually inconsistent, yielding an estimate of interpersonal inequality among the whole population of the country rather than an estimate of regional inequality. But, as a measure of interpersonal inequality, such an estimate is very rough (up to misleading) and not always has an intuitive interpretation. Moreover, the population-weighted inequality indices do not meet requirements to an adequate inequality measure.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality index, Weighting by population, Williamson coefficient of variation, inequality axioms
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R10 - General

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