Atkinson index

The Atkinson index (also known as the Atkinson measure or Atkinson inequality measure) is a measure of income inequality developed by British economist Anthony Barnes Atkinson. The measure is useful in determining which end of the distribution contributed most to the observed inequality.

The index can be turned into a normative measure by imposing a coefficient ${\displaystyle \varepsilon }$ to weight incomes. Greater weight can be placed on changes in a given portion of the income distribution by choosing ${\displaystyle \varepsilon }$, the level of "inequality aversion", appropriately. The Atkinson index becomes more sensitive to changes at the lower end of the income distribution as ${\displaystyle \varepsilon }$ approaches 1. Conversely, as the level of inequality aversion falls (that is, as ${\displaystyle \varepsilon }$ approaches 0) the Atkinson becomes more sensitive to changes in the upper end of the income distribution.

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