The Theil index calculates income inequality within a population using entropy principles. It quantifies inequality trends. The formula considers each individual's income relative to the average income in the population. The index ranges from 0 to 1. A value of 0 indicates perfect equality, while 1 represents extreme inequality. To compute the Theil index, divide the total inequality in the population by the ideal equality level. This provides a clear measure of income distribution within the group. Policymakers and researchers often use the Theil index to assess and address economic disparities in society.