An Index of Real National Growth

Abstract

In assessing the nature of income-growth, it would be desirable for at least two aspects of the growth process to enter the assessment – those of the ‘size’ of growth, and the ‘equitableness’ with which the growth is distributed across the population under consideration. An index of growth which combines these two indicators of size and equitableness – and preferably in a form that is ‘separable’ in the two indicators – is a summary statistic of what might be called ‘real national growth’. It is such a measure of growth, combining within itself considerations of both magnitude and distribution, that is advanced in this article. Two illustrative applications of the paper's concerns are provided: one is a comparison of household income inequality in the United States over two periods of time, 1975 to 1985 and 1995 to 2005, while the other is an assessment of Black–White disparity in the distribution of household income in the United States over the period 2010 to 2020.