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A short note revisiting the concentration index: Does the normalization of the concentration index matter?

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  • John E. Ataguba
Abstract
The concentration index, including its normalization, is prominently used to assess socioeconomic inequalities in health and health care. Wagstaff's and Erreygers' normalizations or corrections of the standard concentration index are the most suggested approaches when analyzing binary health variables encountered in many health economics and health services research. In empirical applications of the corrected or normalized concentration indices, researchers interpret them similarly to the standard concentration index, which may be problematic as this ignores their underlying behaviors. This paper shows that the empirical bounds of the standard concentration index, including the corrected indices, depend not only on the sample size directly but also on the sampling weight. Notably, the paper highlights critical challenges for assessing and interpreting the popular Wagstaff's and Erreygers' corrected concentration indices with binary health variables. Specifically, it shows that it might be misleading, for example, to assess socioeconomic health inequalities using the magnitude of the “symmetric” Erreygers' corrected concentration index in the face of progressive improvements in the binary health variable. Also, Wagstaff's normalized concentration index may give a spurious “concentration” of the binary health variable among the rich or the poor in certain rare instances.

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  • John E. Ataguba, 2022. "A short note revisiting the concentration index: Does the normalization of the concentration index matter?," Health Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 1506-1512, July.
    • Handle: RePEc:wly:hlthec:v:31:y:2022:i:7:p:1506-1512
    DOI: 10.1002/hec.4515
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    References listed on IDEAS

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    1. Wagstaff, Adam & Paci, Pierella & van Doorslaer, Eddy, 1991. "On the measurement of inequalities in health," Social Science & Medicine, Elsevier, vol. 33(5), pages 545-557, January.
    2. Erreygers, Guido, 2009. "Correcting the Concentration Index: A reply to Wagstaff," Journal of Health Economics, Elsevier, vol. 28(2), pages 521-524, March.
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    5. Erreygers, Guido & Clarke, Philip & Van Ourti, Tom, 2012. "“Mirror, mirror, on the wall, who in this land is fairest of all?”—Distributional sensitivity in the measurement of socioeconomic inequality of health," Journal of Health Economics, Elsevier, vol. 31(1), pages 257-270.
    6. Wagstaff, Adam & van Doorslaer, Eddy & Watanabe, Naoko, 2003. "On decomposing the causes of health sector inequalities with an application to malnutrition inequalities in Vietnam," Journal of Econometrics, Elsevier, vol. 112(1), pages 207-223, January.
    7. Adam Wagstaff, 2005. "The bounds of the concentration index when the variable of interest is binary, with an application to immunization inequality," Health Economics, John Wiley & Sons, Ltd., vol. 14(4), pages 429-432, April.
    8. Wagstaff, Adam, 2009. "Correcting the concentration index: A comment," Journal of Health Economics, Elsevier, vol. 28(2), pages 516-520, March.
    9. Erreygers, Guido & Van Ourti, Tom, 2011. "Measuring socioeconomic inequality in health, health care and health financing by means of rank-dependent indices: A recipe for good practice," Journal of Health Economics, Elsevier, vol. 30(4), pages 685-694, July.
    10. Erreygers, Guido, 2009. "Correcting the Concentration Index," Journal of Health Economics, Elsevier, vol. 28(2), pages 504-515, March.
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    12. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
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    3. Aristides Dos Santos, Anderson Moreira & Triaca, Lívia Madeira & Leivas, Pedro Henrique Soares, 2023. "How is smoking distributed in relation to socioeconomic status? Evidence from Brazil in the years 2013 and 2019," Economics & Human Biology, Elsevier, vol. 49(C).

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