Sankhya: The Indian Journal of Statistics

1993, Volume 55, Series B, Pt. 1, 1-26

HOW RICH ARE THE RICH? MODELING AFFLUENCE AND INEQUALITY VIA RELIABILITY THEORY

By

M. C. BHATTACHARJEE, New Jersey Institute of Technology

 

SUMMARY. The paper considers some ideas and appropriate methods from Reliability theory to model affluence and aggregate inequality of distributions. After reviewing some recent work in this area we propose several new indices of inequality and analyse their properties. We stress the role of anti-aging distributions in reliability theory as reflecting the features of skewness and heavy tails of wealth distributions, and contrast our approach to the more traditional methods for measuring inequality familiar to economists. Apart from the results developed here, our primary purpose is to draw the attention of economists to the potential of ideas and methodologies whose roots are in reliability theory, for the problem of measuring inequality of distributions and possibly other stochastic modeling issues in economics. For these purpose, we include a technical appendix which summarises concepts and results from reliability theory referred to in the text along with their interpretations in the context of the present problem.

.

AMS (1991) subject classification. 62N05,62P20,90B25

Key words and phrases. Inequality of distribution reliability theory, measures of inequality

FULL PAPER.

This article in Mathematical Reviews.