Concentration Curves

Abstract Relationships among the distributions of various economic variables are at the core of the economic analysis. This chapter provides a detailed discussion of concentration curves and related theorems, and it reveals how the concentration curves can help us understand the relationships among economic variables. The elasticity of one variable with respect to another is crucial in analyzing relationships among various economic phenomena. However, many economic applications require aggregate elasticity for the whole population. This chapter has developed a new concept of aggregate elasticity based on concentration indices. Concentration indices can be readily estimated from household surveys, providing a practical method of estimating aggregate elasticity.