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This study introduces novel normalized inequality indices for bounded health indicators. These indices consistently rank health inequality across different representations, offering a clearer picture of cross-country disparities.

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Area of Science:

  • Health economics
  • Biostatistics
  • Social epidemiology

Background:

  • Health indicators often have bounded values, posing challenges for standard inequality measurement.
  • Existing methods struggle with consistent inequality rankings and defining maximum inequality for bounded variables.

Purpose of the Study:

  • To develop novel, axiomatically justified inequality indices for bounded health variables.
  • To ensure consistent inequality rankings across attainment and shortfall representations.
  • To provide a more accurate assessment of health inequality, especially in cross-country comparisons.

Main Methods:

  • Proposed a new axiom for ranking maximum-inequality distributions of bounded variables.
  • Developed axiomatic characterization leading to normalized inequality indices.
  • Defined indices based on the proportion of maximum attainable inequality relative to the mean.

Main Results:

  • The proposed indices provide consistent inequality rankings regardless of variable representation (attainment vs. shortfall).
  • New indices measure inequality as a function of the observed proportion of maximum attainable inequality.
  • Empirical illustration revealed different cross-country health inequality patterns compared to traditional indices.

Conclusions:

  • Normalized inequality indices offer a more robust approach to measuring health disparities with bounded variables.
  • These indices address normative challenges in health inequality literature.
  • The findings have implications for understanding and comparing health equity across different populations and time periods.