Monday, September 19, 2011

Fun With The Gini Coefficient: Where In the World Is The United States?

The Gini coefficient is one measure of income inequality in a country. Its end-points are zero and one. Zero would be a case of perfect income equality, one the case of complete income inequality. The lower the value of the Gini coefficient, the more equal the income distribution of a country is.

It is an imperfect measure as are all the other inequality measures. Nevertheless, the maps in this piece are pretty fascinating, even if the piece itself gets the end-point of the Gini coefficient wrong and seems poorly edited otherwise.

Take a look at the second map which shows the relative income inequality of the United States when compared to other countries. The blue countries have more equal income distributions than the United States, the red countries less equal income distributions (data is missing for the gray countries).

Sadly, I cannot write "We Are Number One!" here, whatever "number one" might mean. The United States does somewhat better than many troubled countries, true. It does loads worse than most other developed economies.

It could be that the rankings would look a little different if we measured income distribution after social transfers (assuming that the map is based on incomes earned). My own guess is that the US would do better with a post-social-transfers measure (though just you wait until the Ron Pauls of this world get their hands on the government!), but would still lag far behind most other developed economies.

What's the fun in all this, you might ask. Well, the Republican presidential contenders all wish to increase income inequality in the United States and the Republican state governors are busily doing just that. Indeed, nobody much seems to be bothered by the tendency of this country to roll towards a Banana Republic, because even poor Americans can afford cell phones.

It's a certain kind of American exceptionalism, I guess.