Atkinson index
Topic: Poverty and Inequality: Measurement and Policy · NCERT: Beyond NCERT
Meaning
The Atkinson index (1970) is a welfare-based measure of inequality. It includes an inequality-aversion parameter, ε (epsilon), which shows how much society dislikes inequality. The index tells us what share of total income society would give up to achieve complete equality. A higher ε gives more weight to people at the bottom of the distribution. The index runs from 0 (perfect equality) upward.
Example
Suppose a country's Atkinson index is 0.2. This means society would feel just as well off with 20% less total income, if that smaller income were shared equally. UNDP uses the Atkinson measure to build the Inequality-adjusted Human Development Index (IHDI). The IHDI discounts a country's HDI for unequal spread in health, education and income.
Don't confuse with
- Gini coefficient: this is a purely statistical measure based on the Lorenz curve, with no built-in value judgement. The Atkinson index makes society's aversion to inequality explicit through ε.