what are gini coefficients?

J. Barkley Rosser, Jr. rosserjb at jmu.edu
Fri Aug 18 14:11:24 PDT 2000


To follow up on Doug's remarks (thanks for the wealth gini, :-)), and to fully answer your "bounds" question, well, the bounds are very extreme. We have seen some very egalitarian societies in world history, whose ginis were never measured, but would probably have been much lower than the 16 in the PRC. Heck, zero is the lower bound, indicating absolute equality (not a goal of pure communism, I might add; we do not all have the same "needs").

At the other extreme, try Pharaonic Egypt, or Britain in the nineteenth century. Ginis can never reach one, and decile ratios have no upper bound. All kinds of extreme inequality are possible and many have happened. Barkley Rosser -----Original Message----- From: Doug Henwood <dhenwood at panix.com> To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com> Date: Friday, August 18, 2000 3:59 PM Subject: Re: what are gini coefficients?

>Charles Brown wrote:
>>The thing that struck me about the Gini curves on the LBO website
>>example is that they were so close together. Then there is this
>>discussion around here that Pareto or somebody and others have
>>demonstrated that the income distribution/dispersion/inequality is
>>and has been very close over a the long run ( or is that a joke ?).
>>It would seem like the interesting thing about income distribution
>>is that it doesn't change, suggesting none other than a scientific
>>law at work.
>There have been fairly substantial changes in U.S. ginis over time -
>see the chart at <http://www.panix.com/~dhenwood/IncPov98.html> for a
>long history. Or, in 1974, the richest 20% of families had an income
>9.7 times that of the poorest 20%; 1998, it was 13.8 times. If the
>poorest 20% had the same share of income in 1998 that it did in 1974,
>they'd be about 25% richer. I guess it all depends on perspective:
>even at its most egalitarian, U.S. income distribution was highly
>unequal - it's just gotten more so.
>Cross-country comparisons are even more dramatic. After taxes and
>transfers, someone at the 80th percentile of the U.S. income distrib
>has 9 times the income of someone at the 20th (the numbers in the
>last paragraph are pre-tax and post-transfer). In Sweden, the 80/20
>ratio is 4. Pretax, pre-transfer differences are also wide; in the
>U.S., someone at the 80th percentile of the wage distribution has an
>income 21 times that of someone at the 20th; in Germany, it's 12
>You can get all highminded and say the differences are fairly minor,
>but a few thousand bucks makes a big difference to a bottom quintile
>whose average is under $10,000.

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