Entropy Measures of Inequality*

Abstract

Although sociologists have long been interested in the analysis of inequality, there have been relatively few systematic attempts to measure it. Most measurement has utilized popular existing measures such as the Gini coefficient, which unfortunately is relatively difficult to compute and interpret. This article presents a new measure of inequality (B) that is based upon the concept of entropy. The B measure is used for categorical data and complements Theil's (T) entropy measure for continuous data. The B measure is illustrated for both income and wealth data and successfully meets several criteria for evaluating measures of inequality. These include the criteria of scale invariance, sensitivity to transfers, and adequate upper bounds. A further advantage of sociological entropy measures of inequality is that they facilitate interdisciplinary comparison of work on inequality between sociology and other disciplines (such as economics) which use entropy measures of inequality.