Hoover index - Alchetron, The Free Social Encyclopedia

The Hoover index, also known as the Robin Hood index, but better known as the Schutz index, is a measure of income metrics. It is equal to the portion of the total community income that would have to be redistributed (taken from the richer half of the population and given to the poorer half) for there to be income uniformity.

It can be graphically represented as the longest vertical distance between the Lorenz curve, or the cumulative portion of the total income held below a certain income percentile, and the 45 degree line representing perfect equality.

The Hoover index is typically used in applications related to socio-economic class (SES) and health. It is conceptually one of the simplest inequality indices used in econometrics. A better known inequality measure is the Gini coefficient which is also based on the Lorenz curve.

Computation

For the formula, a notation is used, where the amount N of quantiles only appears as upper border of summations. Thus, inequities can be computed for quantiles with different widths A . For example, E i could be the income in the quantile #i and A i could be the amount (absolute or relative) of earners in the quantile #i. E total then would be the sum of incomes of all N quantiles and A total would be the sum of the income earners in all N quantiles.

Computation of the Robin Hood index H :

H = 1 2 ∑ i = 1 N | E i E total − A i A total | .

For comparison, here also the computation of the symmetrized Theil index T s is given:

T s = 1 2 ∑ i = 1 N ln ⁡ E i A i ( E i E total − A i A total ) .

Both formulas can be used in spreadsheet computations.

References

Hoover index Wikipedia

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