Formula for calculating Atkinson index
The Atkinson index is a measure of income inequality that takes into account the importance individuals place on relative deprivation. It is calculated by dividing the sum of the absolute values of the differences in income between each person and the average income by the average income. The formula can be expressed as follows: A = 1 - (1/L) * ∑(|y_i - y_bar|), where A is the Atkinson index, L is the measure of relative deprivation, y_i is the income of individual i, and y_bar is the average income. The Atkinson index ranges from 0 (perfect equality) to 1 (maximum inequality).
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Formula for calculating Gini coefficient
The Gini coefficient is a measure of income inequality within a population. It ranges from 0 to 1, with 0 representing perfect equality and 1 representing extreme inequality. To calculate the Gini coefficient, you need to follow a specific formula. First, arrange the incomes of the population in ascending order. Next, calculate the cumulative percentages of the population and the cumulative percentages of income. Then, plot these values on a graph. Finally, use the graph to calculate the area between the Lorenz curve and the line of perfect equality. This area divided by the area under the line of perfect equality gives you the Gini coefficient.
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