A Polarization Index for Overlapping Groups

The well-known index of income bipolarization proposed by Wolfson (1994) requires two groups to be split according to the median income and, therefore, to be non-overlapping. The aim of this paper is to propose a new polarization index in the spirit of the Wolfson index. It allows for any possible partition of the population in two or more (also overlapping) groups. The new index maintains the simplicity and immediate comprehension of the Wolfson index, though being much more flexible. An application is then provided for German and Italian income data