On Economic Inequality

by Amartya Sen

In this classic text, first published in 1973, Amartya Sen relates the theory of welfare economics to the study of economic inequality. He presents a systematic treatment of the conceptual framework as well as the practical problems of measurement of inequality. In his masterful analysis, Sen assesses various approaches to measuring inequality and delineates the causes and effects of economic disparities. Containing the four lectures from the original edition as well as a new introduction, this timeless study is essential reading for economists, philosophers, and social scientists.
In a substantial new annexe, Amartya Sen, jointly with James Foster, critically surveys the literature that followed the publication of this book, and also evaluates the main analytical issues in the appraisal of economic inequality and poverty.

Genres: Economics, Nonfiction, Philosophy, Politics

276 pages, Paperback

First published February 1, 1997

About the author

Amartya Kumar Sen is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to welfare economics and social choice theory, and for his interest in the problems of society’s poorest members.

Sen was best known for his work on the causes of famine, which led to the development of practical solutions for preventing or limiting the effects of real or perceived shortages of food. He is currently the Thomas W. Lamont University Professor and Professor of Economics and Philosophy at Harvard University. He is also a senior fellow at the Harvard Society of Fellows and a Fellow of Trinity College, Cambridge, where he previously served as Master from the years 1998 to 2004. He is the first Asian and the first Indian academic to head an Oxbridge college.

Amartya Sen's books have been translated into more than thirty languages. He is a trustee of Economists for Peace and Security. In 2006, Time magazine listed him under "60 years of Asian Heroes" and in 2010 included him in their "100 most influential persons in the world".

Reviews

[Leman · Rating 5 out of 5]

İqtisadi bərabərsizliyin ölçülməsi və müqayisəsi haqqında əvəzolunmaz mənbədir. Nobel laureatçısı Amartya Senin bir universitetdəki mühazirələrinə əsaslanan kitab bir qədər riyazi və statistik bilik tələb edir, lakin başa düşüldükdə bərabətsizlik haqqında ətraflı fikir formalaşdırır.

[Julie White · Rating 4 out of 5]

The precursor to Inequality Re-examined. I would go straight to that book for a more up-to-date version of his thinking, though it was interesting to read both and see how his views developed.

[Gustavo HdzMry · Rating 4 out of 5]

Sen expone de manera analítica, a la vez que con reflexiones rigurosas, su contribución para revivir el debate y teoría de la desigualdad económica. Reconoce que una medida de desigualdad sólo tiene sentido si su fin es la búsqueda de aquello que se entiende como lo que es justo y el bienestar (algo que el enfoque utilitarista de la economía evadió y prácticamente concluyó su análisis con el equilibrio de Pareto y la igualdad de utilidades marginales cuando se asumió que las funciones individuales de utilidad no son comparables).

[Goetz Kluge · Rating 4 out of 5]

If you do not feel comfortable with how entropy is applied to measure inequality, you are not alone: Many people have difficulties to accept that inequality is "order" and that equality is "disorder". Using the terms "order" and "disorder" is a popular but not the best way to explain entropy. One man's order is another man's disorder, which leads to the second point: Is equality good or bad? Is order good or bad? Is inequality good or bad? is disorder good or bad?

But the main reason for the confusion is a simple mistake: An entropy measure like Theil's index is not an entropy, it is a redundancy. A redundancy is actual entropy of a system deducted from the possible maximum entropy of that system. Therefore, redundancy yields a high value for inequal distribution, whereas entropy is high for even distribution.

Calling Theil's measure an "entropy" even confused Amartya Sen. From Amartya Sen's "On Economic Inequality" I learned a lot about inequality measures. But entropy seems not do go down too well with him (1973) and his co-author James E. Foster (1997). When describing the "interesting" "Theil entropy" (chapter 2.11), Sen sees a contradiction between entropy being a measure of "disorder" in thermodynamics and entropy being a measure for "equality". If you assume that equality is "order" and thus a antonym for "disorder", then you may believe - Sen even calls it a "fact" - that the Theil coefficient is computed from an "arbitrary formula". However, there is no contradiction: As you know by now, the Theil index is a redundancy, not an entropy. That is the answer to Sen's objection.

Sen and Foster had another complaint. They didn't think, that Theil's index really yields to "intuition". It may help to remember, that the Theil index (I prefer to call it Theil redundancy) is 0% for a 50%:50% distribution (equality) and close to 100% for an equivalent to the (in)famous 80%:20% distribution. And how much does the Gini index yield to intuition?

[Diego · Rating 4 out of 5]

Los interesados en la Inequidad y la Pobreza los llamados "pobretologos" estarán muy interesados en este libro, es un gran Trabajo de Amartya Sen donde deja ver las razones por las que años después seria galardonado con el premio Nobel de Economía, es una obra cargada técnicamente y donde se analiza aspectos metodológicos e incluso filosóficos respecto al estudio de la desigualdad y la cual seria mucho mejor aprovechada por un lector informado al respecto o con conocimientos intermedios de economía.

[Leonardo]

Utilitarianism has been much criticised, not least for being concerned solely with the sum of individual utilities, and being, in the words of Amartya Sen, “supremely unconcerned with the inter-personal distribution of that sum. This should make it a particularly unsuitable approach to use for measuring or judging inequality.”

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[Jesse Goodrich · Rating 5 out of 5]

Strong analysis beyond income as a measure of poverty. OEI by Sen has a complex beginning read but offers more reachable content in the Annexe as the second half of this relatively short book.

[Muhammet Kutlu]

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