Measurement tools for inequality, such as the Gini Coefficient, income share ratios, and wealth concentration metrics, are instrumental in assessing the effectiveness of government policies. By comparing these measurements before and after the implementation of policies, analysts can determine the impact of such policies on income and wealth distribution. For instance, if a government introduces progressive taxation or welfare schemes aimed at redistributing income, a subsequent decrease in the Gini Coefficient or a more equitable Lorenz Curve would indicate the policy's effectiveness. Conversely, if these measurements show no significant change or an increase in inequality, it may suggest that the policies are ineffective or inadequately targeted. These tools thus serve as critical indicators for policy evaluation, helping governments refine their strategies to address economic disparities more effectively. They also provide a basis for public accountability, enabling citizens to understand and critique the impact of economic policies on societal inequality.

Ethical considerations in the measurement and interpretation of economic inequality revolve around fairness, social justice, and the accurate representation of societal disparities. Firstly, there's an ethical imperative to ensure that the data used is accurate and representative, avoiding biases that could skew the understanding of inequality. Misrepresentation or underreporting, whether intentional or accidental, can lead to misguided policies that fail to address the real issues. Secondly, the interpretation of these measurements must be done with an awareness of the broader social implications. For instance, highlighting extreme inequality might necessitate ethical considerations regarding the redistribution of wealth, raising questions about the balance between rewarding economic contribution and ensuring social equity. Additionally, there's a moral aspect to how these findings are communicated to the public and used in policy-making, ensuring that the discourse around inequality fosters constructive solutions rather than exacerbating social divisions. Ultimately, the ethical lens in this context focuses on achieving a fair and just society, where economic policies are informed by a balanced and empathetic understanding of inequality.

The Gini Coefficient and other inequality measures can indeed be applied at regional or local levels, providing valuable insights into sub-national disparities. Applying these tools at a smaller scale allows for the analysis of inequality within specific areas, accounting for regional economic conditions, demographic differences, and local policy impacts. For instance, a country might have a moderate national Gini Coefficient, but regional analysis could reveal significant disparities between urban and rural areas or among different states or provinces. Such localised measurements are crucial for understanding the specific challenges and needs of these regions. They enable regional policymakers to tailor their strategies to address localised forms of inequality effectively. Additionally, this approach can highlight areas of best practice or particular concern, fostering a more nuanced and targeted response to inequality. Regional and local measurements also encourage community engagement and awareness, as they reflect the immediate economic conditions experienced by residents, thus fostering a more informed and participatory approach to economic planning and policy-making.

Considering both income and wealth inequality is essential in economic analysis because they capture different aspects of economic disparity. Income inequality refers to the unequal distribution of earnings, wages, and other forms of income, reflecting short-term financial status and immediate living standards. In contrast, wealth inequality deals with the distribution of assets like property, stocks, and savings, signifying long-term financial security and the capacity to generate future income. While income inequality can indicate current economic opportunities and access to resources, wealth inequality often reflects historical accumulation and transmission of resources, highlighting deeper-rooted economic disparities. Analysing both provides a comprehensive understanding of economic health and social equity. For instance, a society might have relatively equal income distribution but significant wealth disparities, indicating issues like unequal access to property ownership or education. Thus, a holistic view of both forms of inequality is crucial for formulating effective economic policies and understanding the full spectrum of social stratification.

The Lorenz Curve is a graphical representation that complements the Gini Coefficient by providing a visual understanding of income or wealth distribution. It plots the cumulative percentage of total income or wealth against the cumulative percentage of the population. The curve’s deviation from the line of perfect equality (a 45-degree line) visually represents the degree of inequality. While the Gini Coefficient quantifies this inequality into a single value, the Lorenz Curve offers a more nuanced picture. It shows not only the extent of inequality but also how income or wealth is distributed across different segments of the population. For instance, the curve can highlight whether the middle class holds a significant share of wealth or whether the majority is concentrated among the top or bottom percentiles. This detailed distribution view is essential for understanding the dynamics of inequality within an economy, guiding more targeted policy interventions.