The Social Welfare Implications of the Zenga Index

TL;DR

This paper explores the social welfare implications of the Zenga index, a new inequality measure, comparing it with traditional indices like the Gini coefficient and highlighting its unique features in evaluating inequality.

Contribution

It introduces a social welfare framework based on the Zenga index, revealing its distinctive properties and differences from classical inequality measures.

Findings

Zenga index offers a unique perspective on inequality evaluation.

The social welfare approach based on Zenga shows peculiar features.

Comparison with Gini and Bonferroni indices highlights differences.

Abstract

We introduce the social welfare implications of the Zenga index, a recently proposed index of inequality. Our proposal is derived by following the seminal book by Son (2011) and the recent working paper by Kakwani and Son (2019). We compare the Zenga based approach with the classical one, based on the Lorenz curve and the Gini coefficient, as well as the Bonferroni index. We show that the social welfare specification based on the Zenga uniformity curve presents some peculiarities that distinguish it from the other considered indexes. The social welfare specification presented here provides a deeper understanding of how the Zenga index evaluates the inequality in a distribution.