Concentration Index versus Diversity Index

From Open Risk Manual

Concentration Index versus Diversity Index

Concentration indexes and diversity indexes are related families of metrics that aim to assess the prevalence of some category within a broader set.

Discrete versus Continuous data sets

The main different between a concentration index and a diversity index is in the nature of the statistical observations that are used as input data for the index calculation. There are two possible starting points for input data:

Examples

  • Discrete: For example p_i = \frac{n_i}{N} is the proportion of individuals in a population with total count N that belongs to Category i. A number of indexes used in diversity studies (Abundance, Richness, Margalev's, Menhinick’s diversity indexes) are based on such species counts.
  • Numerical For example E_i is a range of observations of some continuous quantity E such as risk Exposure or income. Such data will typically converted into weights w_i = \frac{E_i}{E_T}

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