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MENTAL MODEL · M0104

Theil Index

Theil Index
BusinessHigh supportEconomics
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

The Theil Index, also known as the Theil Index, is a statistical measure of economic inequality. It has also been used to measure other social inequalities, such as racial segregation. The Theil Index is derived primarily from the concept of information entropy in information theory. The Theil Index equals information redundancy, that is, the maximum possible information entropy of the data minus the observed information entropy. It is a special case of the generalized entropy index and can be viewed as a measure of redundancy, diversity, inequality, non-randomness, and compressibility. The Theil Index was first proposed by Henri Theil, an econometrician at Erasmus University Rotterdam in the Netherlands.

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The Theil Index, also known as the Theil Index, is a statistical measure of economic inequality. It has also been used to measure other social inequalities, such as racial segregation. The Theil Index is derived primarily from the concept of information entropy in information theory. The Theil Index equals information redundancy, that is, the maximum possible information entropy of the data minus the observed information entropy. It is a special case of the generalized entropy index and can be viewed as a measure of redundancy, diversity, inequality, non-randomness, and compressibility.

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An entropy-based measure of income (or wealth) inequality, where 0 indicates perfect equality and higher values indicate greater inequality. It can be additively decomposed into within-group and between-group inequality, facilitating analysis of the sources of disparity.

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Source support: Explicit

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