The Kakwani index is a measure of the progressivity of a

social intervention Social interventionism is an action which involves the deliberate intervention of a public or private organization into social affairs for the purpose of changing them. In other words, it is a deliberate attempt to change society in some way, "an a ...

, and is used by

social scientist Social science (often rendered in the plural as the social sciences) is one of the branches of science, devoted to the study of societies and the relationships among members within those societies. The term was formerly used to refer to the ...

statistician A statistician is a person who works with Theory, theoretical or applied statistics. The profession exists in both the private sector, private and public sectors. It is common to combine statistical knowledge with expertise in other subjects, a ...

s, and

economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

s. It is named after the economist who first proposed and used it, Nanak Chand Kakwani. The Kakwani index uses the Gini framework to measure how progressive a social intervention is. It is equal to the difference between the Gini index for the social intervention, and the Gini index for incomes before imposition of the policy intervention. Theoretically, the Kakwani index can vary between −1 and 1; the larger the index is, the more progressive is the social intervention. The index is calculated using the following formula: :

K_t = 2\sum^n_ \frac(\frac - \sum_^k \gamma_i) - G_,

where

i = 1, . . ., k

denotes individual

i

n

is the total number of individuals in society,

\gamma_i

is the share of total taxes paid by individual

i

, and

G_

is the before-tax Gini coefficient. Using the formula for the Gini coefficient, the equation for the Kakwani index can be reduced to: :

K_t=\frac \sum_^n (\sum_^k \alpha_i - \gamma_i),

where

\alpha_i

denotes the share of income received by individual

i

. The Kakwani index was originally devised to measure the progressivity of

tax system A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax comp ...

s, in which case, it would be equal to the Gini concentration index for the taxes collected minus the

Gini index In economics, the Gini coefficient ( ), also known as the Gini index or Gini ratio, is a measure of statistical dispersion intended to represent the income inequality, the wealth inequality, or the consumption inequality within a nation o ...

for pre-tax incomes. This can be shown to be equal to the absolute decline in the Gini index for incomes, caused by the imposition of taxation, divided by the average net rate of taxes. The Kakwani index is also commonly used to examine the equity of government

health care Health care, or healthcare, is the improvement or maintenance of health via the preventive healthcare, prevention, diagnosis, therapy, treatment, wikt:amelioration, amelioration or cure of disease, illness, injury, and other disability, physic ...

provision. In that situation, the Kakwani index would be equal to the difference between the

Gini coefficient In economics, the Gini coefficient ( ), also known as the Gini index or Gini ratio, is a measure of statistical dispersion intended to represent the income distribution, income inequality, the wealth distribution, wealth inequality, or the ...

for incomes and the Gini concentration index for out‐of‐pocket health care payments.

References

{{Reflist, 30em

External links

* Pramod Kumar Chaubey (eGyanKosh, IGNOU/

Indira Gandhi National Open University Indira Gandhi National Open University (IGNOU) is a National university, public Open university (concept), open & Distance education, distance learning university located in Delhi, India. Named after the former Prime Minister of India, prime ...

):
Unit 11: Measures of Inequality
' – PD/gemeinfrei (PDF-Datei; 3,34 MB). Economic indicators Eponymous indices