A Parametric Model for Inequality of Wealth
The practical value of the index is in modeling applications. The index allows us to model a any distribution given a mean, variance, and skew consisting of two continuous comparmtents parametrically. For example, a modeler may enter as inputs X1, X2, mean, variance, and skewness, and get the Y1 and Y2 from the model. Alternatively, a modeler may enter as inputs Y1, Y2, mean, variance, and skewness, and get in return the X1 and X2 shares of the population from the model. This is important in applications with continuous models in which modeling a distribution as random process is unecessary complicated and redundant.