This paper considers why inequalities between groups (horizontal inequalities -HIs) matter, as well as inequalities between individuals (vertical inequality - VI). It argues that HIs matter both from the perspective of the wellbeing of individuals within groups, who are concerned about how their group is faring relative to others, and instrumentally, through the impact of group inequalities in reducing growth potential and provoking violence. The paper reviews a set of measures for HI. We explore the correlation among selected measures of vertical and horizontal inequality in Indonesia using census survey data and show that there is very high correlation among the VI measures and high correlation among the HI measures, while the correlation between HI and VI measures is less clear. Using data over time for South Africa and the United States we illustrate differences between alternative HI measures. The most appropriate measure depends on the purpose for which it is intended. For empirical research on the consequences of group inequalities, the more descriptive measures are preferable. We conclude that group Ginis and the group coefficient of variation weighted by the population size of the group are to be preferred from this perspective. However, in some contexts a simple ratio of group performance among the two groups of interest may be most informative.
CRISE Working Paper 19, 30 pp.
Why Horizontal Inequalities Matter: Some Implications for Measurement.