Application of The Theil Index
Theil's measure can be converted by the operation into one of the indexes of Anthony Barnes Atkinson, where may or may not be used to introduce an inequality aversion factor into the formula, with being the default. The result of the conversion also has been called normalized Theil index.
James E. Foster used such a measure to replace the Gini coefficient in Amartya Sen's welfare function W = f(income,inequality). The income e.g. is the average income for individuals in a group of income earners. Thus, Foster's welfare function can be computed directly from the Theil index, if the conversion is included into the computation of the average per capita welfare function:
Using the "Theil-L" index (see below) for in that formula yields results similar to using the Atkinson index for computing the welfare function.
Read more about this topic: Theil Index
Famous quotes containing the words application of the, application of, application and/or index:
“It is known that Whistler when asked how long it took him to paint one of his “nocturnes” answered: “All of my life.” With the same rigor he could have said that all of the centuries that preceded the moment when he painted were necessary. From that correct application of the law of causality it follows that the slightest event presupposes the inconceivable universe and, conversely, that the universe needs even the slightest of events.”
—Jorge Luis Borges (1899–1986)
“I think that a young state, like a young virgin, should modestly stay at home, and wait the application of suitors for an alliance with her; and not run about offering her amity to all the world; and hazarding their refusal.... Our virgin is a jolly one; and tho at present not very rich, will in time be a great fortune, and where she has a favorable predisposition, it seems to me well worth cultivating.”
—Benjamin Franklin (1706–1790)
“It would be disingenuous, however, not to point out that some things are considered as morally certain, that is, as having sufficient certainty for application to ordinary life, even though they may be uncertain in relation to the absolute power of God.”
—René Descartes (1596–1650)
“Exile as a mode of genius no longer exists; in place of Joyce we have the fragments of work appearing in Index on Censorship.”
—Nadine Gordimer (b. 1923)