Inequality In Context

World Inequality

George Mason University economics professor explains:

Along the horizontal axis are within-country income percentiles running from the bottom 5% (1st ventile) to the top 5% (20th ventile). Along the vertical axis are world income percentiles.

The graph shows that the bottom 5% of Brazilians are among the poorest people in the world but the top 5% are among the richest. Thus the vertical range of the curve tells us about within-country inequality.

Comparing between countries we see that the poorest 5% of Americans are among the richest people in the world (richer than nearly 70% of other people in the world). The poorest 5% of Americans, for example, are richer than the richest 5% of Indians.

4 Responses to “Inequality In Context”

  • This chart leaves me baffled as to why progressives worry about income inequality in America. It’s the rest of the world that really needs the help.

  • Darf – I think I can answer that.

    This chart compares the U.S. to the developing world. And it should come as no surprise to anyone that we match up well in that competition.

    A much more useful chart would have perhaps the U.S., Canada, Japan and Sweden. If the U.S. out-performs Sweden, (and I don’t know the answer to this question) then I totally agree with you that Progressives have no right to complain.

    But if Sweden makes us look bad, then I’ll side with the Progressives – improvement is needed.

  • Still, from a Rawlsian ethical standpoint, the underprivileged are virtually all outside the US. If wealth should be redistributed, it should be distributed out of the US.

  • Actually, only one aspect of the chart compares the US to the Third World. Another way, and the more important way, is to look at the low and high within a country. That’s why the author says “… the vertical range of the curve tells us about within-country inequality.”

    The gap between the two in the US is not as big as it is in the other countries. Of course, here too it would be interesting to see other countries. My undestanding is that the gap is even smaller in Europe and Canada.

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