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:
“Most people, no doubt, when they espouse human rights, make their own mental reservations about the proper application of the word “human.””
—Suzanne Lafollette (1893–1983)
“The human mind is capable of excitement without the application of gross and violent stimulants; and he must have a very faint perception of its beauty and dignity who does not know this.”
—William Wordsworth (1770–1850)
“My business is stanching blood and feeding fainting men; my post the open field between the bullet and the hospital. I sometimes discuss the application of a compress or a wisp of hay under a broken limb, but not the bearing and merits of a political movement. I make gruel—not speeches; I write letters home for wounded soldiers, not political addresses.”
—Clara Barton (1821–1912)
“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)