The Theil index is a statistical measure used to assess income inequality within a population. It is named after econometrician Henri Theil. The index compares the actual distributions of income or wealth to an ideal hypothetical distribution of perfect equality. A value of 0 indicates perfect equality, while a higher value signifies greater inequality. The formula for calculating the Theil index involves summing the ratio of each individual’s income or wealth to the overall average. This index provides policymakers and social scientists with a quantitative measure to evaluate the fairness and equity of a society. By understanding the Theil index, policymakers can make informed decisions to address income disparities and promote a more equitable society.