Inequality, Poverty, and Stochastic Dominance by Russell Davidson Department of Economics and CIREQ AMSE and GREQAM McGill University Centre de la Vieille Charit´e Montr´eal,Qu´ebec, Canada 2 rue de la Charit´e H3A 2T7 13236 Marseille cedex 02, France email:
[email protected] February 2017 The First Step: Corrado Gini Corrado Gini (May 23, 1884 { 13 March 13, 1965) was an Italian statistician, demog- rapher and sociologist who developed the Gini coefficient, a measure of the income inequality in a society. Gini was born on May 23, 1884 in Motta di Livenza, near Treviso, into an old landed family. He entered the Faculty of Law at the University of Bologna, where in addition to law he studied mathematics, economics, and biology. In 1929 Gini founded the Italian Committee for the Study of Population Problems (Comitato italiano per lo studio dei problemi della popolazione) which, two years later, organised the first Population Congress in Rome. In 1926 he was appointed President of the Central Institute of Statistics in Rome. This he organised as a single centre for Italian statistical services. He resigned in 1932 in protest at interference in his work by the fascist state. Stochastic Dominance 1 The relative mean absolute difference Corrado Gini himself (1912) thought of his index as the average difference between two incomes, divided by twice the average income. The numerator is therefore the double sum Xn Xn jyi − yjj; i=1 j=1 where the yi, i = 1; : : : ; n are the incomes of a finite population of n individuals, divided by the number of income pairs.