Economic inequality : Measurement and the analysis

The paper analyzes the methods and indices for evaluating population’s economic inequality. Based on the scientific literature, recommendations of international organizations and data available from the Department of Statistics at Lithuanian Republic House-hold Budget, calculations are made and actual results are discussed. Advantages and disadvantages of different methods and indices, as well as their application, are defined. Based on the official consumption expenditure data available from Lithuanian Department of Statistics an analysis of economic inequality in urban and rural areas in Lithuania was conducted. The findings revealed remarkable differences. Population in both urban and rural areas spend about 39 per cent of total consumption expenditure on food and non-alcohol beverages what is the highest indicator in the EU. Actual variation in consumption expenditures exceeds 50 per cent; consis-tently the officially shown mean of consumption expenditures is not a precise factor reflecting current situation. Actual distribution of consumption expenditures in Lithuanian cities and in the country differs greatly from the ideal one. The distributions of consump-tion expenditure are best described by the third power polynomial. The findings of the study allowed for drawing a conclusion that there is no single best measure of economic inequality; each of them has its advantages and disadvantages. An exhaustive picture of the situation is only possible when different methods and indices are applied and combinedVytauto Didžiojo universitetasŽemės ūkio akademij