From an inequality analysis point of view, an attractive feature of the variance is that any transfer from a poorer person to a richer person, ceteris paribus, will increase the variance and hence the inequality, thus satisfying the Pigou-Dalton principle for inequality measures . However, the variance depends on the mean income, and one distribution may show a greater relative variation but have a lower variance if it has a smaller mean. The variance is also not independent of the income scale. If all incomes are doubled, the variance quadruples, thus violating the income scale independence axiom. This is perhaps an “undesirable property” . CV counters this problem by concentrating on the relative variation. It is simply defined as the standard deviation divided by the mean. This inequality measure is a member of the Generalised Entropy measures. CV has the property that it attaches equal weights to transfers at different levels of income.The second theory, theory of functional or factor share distribution of income, attempts to explain the share of total national income that each of the factors of production receives .

Instead of looking at individuals as separate entities, the theory of functional income distribution makes reference to the percentage that labour receives as a whole and compares this with the percentages of total income distributed in the form of rent, interest, and profit . Although specific individuals may receive income from all these sources, that is not a matter of concern for the functional approach . The theory attempts to explain the income of a factor of production by the contribution that this factor makes to production assuming that supply and demand curves determine the unit prices of each productive factor. When these unit prices are multiplied by quantities employed on the assumption of efficient factor utilization, then a measure of the total payment to each factor is obtained. For example, the supply of and demand for labour are assumed to determine its market wage. When this wage is multiplied by the total level of employment, a measure of total wage payments, also sometimes called the total wage bill, is obtained. It is a neat and logical theory in that each and every factor gets paid only in accordance with what it contributes to national output, no more and no less. This model of income distribution is at the core of the Lewis theory of modern-sector growth based on the reinvestment of rising capitalist profits . Unfortunately, the relevance of the functional theoryis greatly diminished by its failure to take into account the important role and influence of nonmarket forces such as power in determining these factor prices .

In general, new approaches are emerging to make the results of income inequality analysis more meaningful. Park et al. for example, have proposed a new framework for measuring income inequality based on the unequally distributed incomes that are obtained by removing the equally distributed parts from incomes. They then derive the normalized norm indexes from the cumulative distribution function and the un-scaled Lorenz curve of the UD incomes. Using the example of income distributions and the Luxembourg Income Study datasets, Park et al. show that, the normalized norm indexes evaluated income inequality appropriately and solved the negative income problem. Elsewhere in the Mediterranean countries, Benedetti et al. provide point and variance estimates of two widely used income-poverty indicators, belonging to the class of the Foster-Greer-Thorbecke , and two widely used incomeinequality indicators. They analyse the spatial distribution of poverty by constructing maps at territorial level. Their estimation results revealed that national poverty indicators hide a high heterogeneity of poverty across regions within each country. They adopted the Jackknife replication method because of its convenient properties and they found that the uncertainty measure was influenced by the reduced number of sampling units in each region.

It should be noted here that, the FGT class is preferred by some researchers for having certain advantages, including its simple structure based on powers of normalized shortfalls, which facilitate communication with policymakers . Its axiomatic properties are also viewed as sound and include the helpful properties of additive decomposability and subgroup consistency, which allow poverty to be evaluated across population subgroups in a coherent way .We constructed a conceptual framework which shows that income inequality and poverty in mountain areas, is a result of an array of both internal and external factors. These factors vary depending on the nature and source of inequality, such as, inequality in earnings of the working population, inequality in earnings of the total population, as well as, household income inequality beforeand after redistribution, just to mention a few.