Measuring Inequality - What kind of inequality matters and what's the best way to measure it?

Abstract: This thesis investigates what kind of inequality the world is concerned about today and compares traditional and new measures of inequality to see how these measures relate to current views on fairness and justice. The analysis is based on different theories of justice and measurement princi- ples, and the relationship between each measure and the theory is investigated. Latin America and the Caribbean have been in the spotlight when developing the new measures because of the region’s severe problems with inequality, and data from this region is used for exemplification in the analy- sis. As the world’s concern about inequality seems to have increased in the last decades there’s also been a shift from a focus on outcome inequality to a focus on equal opportunities. There’s an exten- sive research showing that the world agrees that these issues should be a priority for policy makers. Inequalities caused by circumstances outside of the individual control are considered unjust and should be corrected, while other inequalities are considered fair or even good. This study finds that the traditional measures of inequality have become inappropriate as a tool since outcome inequality is no longer of interest. What policy makers need is a measure to determine the sources of inequal- ity in society and how opportunities are distributed between it’s members. The new measures are definitely a step in the right direction, even if there might be comparability and measurement issues to work out before a wider implementation is possible.