Thursday, January 13, 2011

Blog Assignment Number 2

The Gini Coefficient.

1) The Gini Coefficient is used to measure income distribution within a country. As such, it is useful to International Economists, Activists, Politicians, and world travelers alike. To economists, it represents a measure of how concentrated a country's wealth really is. To activists, it can reveal the abject injustice in some economic systems, to politicians, it offers clues into wear the power in a supposed democracy really is (concentrated within a ruling aristocracy who own most of the country or spread out over a powerful middle class), and to world travelers, it can dictate how safe it is to venture far from wealthy tourist areas.

2) Since the Gini Coefficient is simply a ratio of the Lorenz, it is easy for anyone with a fairly basic knowledge of calculus to calculate. However, many organizations keep records of the Gini coefficients of various countries. The most notable of these organizations(that are therefore highest up the Google queue) are the World Bank and the CIA World Factbook.

3) While the Gini Coefficient can be used to describe the ratio of distributions of just about anything in just about any population, it is most often used to calculate the equality of wealth distribution. As such, I've included the Gini Coefficients of several countries. A number of 0 would represent total equality (everyone citizen possesses same wealth) and a number of 100 would represent total inequality (one citizen possesses the entire country's wealth).

Argentina 46
Botswana 63
Canada 32
China 42
France 33
Germany 27
India 37
Japan 38
Mexico 48
Tunisia 40
Sweden 23
U.S.A. 45

As you can see, income distribution can very widely from country to country. Sweden for instance, has relatively high equality while Botswana has extremely high inequality. It is worth noting that this is only a measure of distribution of wealth. Though United States has roughly the same amount of inequality as Tunisia, the living situations in the two countries are extremely different. While there is a large gap between the wealthy and the poor in both countries, the measures of wealth are relative. Many people in the United States earn a disproportionally low living for this country can still afford basic cable; the same cannot be said for the lower classes in Tunisia. Because of this, people must be careful in making assumptions about standards of living from this data.

The CIA World Factbook

No comments:

Post a Comment