The Atkinson Index measures income inequality by considering how much the lower-income group earns. It calculates inequality based on the distribution of income among all individuals in a society. The formula involves taking the difference between what the wealthiest and poorest individuals earn and then applying a parameter. A lower Atkinson Index signifies less inequality, while a higher index indicates more inequality within a population. This index is useful for policymakers to understand the level of income disparity and implement measures that can potentially reduce inequality and promote economic equity among different segments of society.

The Atkinson Index calculation formula assesses income distribution inequality by using a specific parameter value. It considers the lower-tail weight to measure inequality sensitivity. A lower Atkinson Index suggests lesser inequity. The index accounts for societal sensitivity. Researchers use it for analyzing income distribution dynamics. The formula involves exponentiation and computation of cumulative distribution function values. The Atkinson Index measures inequality severity. Policymakers utilize it to devise equitable redistribution strategies. An income distribution skewness factor is part of the Atkinson Index formula. This parameter's value influences the Index output significantly. Understanding the Atkinson Index formula is crucial for addressing income inequality issues.