The ramifications for health and economic security during the current pandemic have been greater for some people than for others. The global impact of Covid-19 suggests that existing inequalities can deepen and it is of paramount importance for policymakers to prevent longstanding inequalities from becoming worse.
The Lorenz curve is a commonly used metric that allows for the quick and visual comparison of inequality across countries. However, if the Lorenz curves cross they cannot provide a conclusive ranking between distributions.
The Gini coefficient uses information from the entire income distribution and is independent of the size of a country’s economy and population. It values change depending on what is measured—wages, before—or after—tax income, wealth, or consumption.
The Interdecile ratio is the 90–10 ratio, which shows the income level of individuals at the top of the income distribution (top 10%) relatively to the income level of those at the bottom of the distribution (bottom 10%). However, the downside of using interdecile ratios is that they ignore incomes between percentiles, as well as above the highest and below the lowest percentile.
The Palma ratio represents a ratio of the income of the richest 10% of the distribution to those in the bottom 40%. For instance, if policymakers care more about what happens to the poor they should use the Palma ratio instead of the Gini coefficient as their inequality measure and focus on consumption instead of income data.
The Theil index can decompose inequality into within- and between-group inequality. The Theil index is less intuitive and not directly comparable across populations with different sizes or group structures.