Economics Income Inequality Questions
Income inequality is typically measured using various statistical indicators, such as the Gini coefficient, the Palma ratio, and the income quintile ratio. The Gini coefficient is the most commonly used measure, which ranges from 0 to 1, with 0 representing perfect equality and 1 representing extreme inequality. It measures the extent to which income distribution deviates from a perfectly equal distribution. The Palma ratio, on the other hand, compares the share of income held by the top 10% of the population to the share held by the bottom 40%. Lastly, the income quintile ratio compares the income of the top 20% of the population to the income of the bottom 20%. These measures provide insights into the distribution of income within a society and help assess the level of income inequality.