This paper establishes the principles which should govern the welfare and inequality analysis of heterogeneous income distributions. Two basic criteria - the 'equity preference' condition and the 'compensation principle' - are shown to be fundamentally incompatible. The paper favours the latter,...

The Gini coefficient is based on the sum of pairwise income differences, which can be decomposed into separate sums for individuals. Differences with poorer people represent an individual's advantage, while those with richer people constitute deprivation. Weighting deprivation and advantage...

This paper reviews the theory and application of decomposition techniques in the context of spatial inequality. It establishes some new theoretical results with potentially wide applicability, and examines empirical evidence drawn from a large number of countries.