Other Indices of Income Distribution Measurements essay

The Gini Coefficient is used to determine the degree of income inequality within a particular society. At one end of the scale (0) is perfect income equality where everyone in Utopia has the same income. At the other end of the scale (1) is perfect income inequality where one person holds all the property while everyone else in Serfdom has an income of zero. According to the Gini index, most developed European nations have Gini coefficients between 0. 24 and 0.

36, which is quite egalitarian when compared with the United States at 0. 42. However, it is more likely for the computer this is written on to spontaneously disappear than for there ever to achieve a society with a Gini index of zero. “To some extent, taxation and social spending have offset increases in earnings inequality, but redistribution by governments has failed to keep up with inegalitarian market forces. ” This is why each government establishes guidelines for poverty.

This is a minimum guideline of survival. For example, if a family of four were living on less than $20,000/year, they are below the poverty line. In another country, the poverty rate might be less than $1/day. These guidelines vary in time and place, dependent on the cost of living and people’s expectations. Today, there is a movement afoot to equip everyone with indoor plumbing. Two hundred years ago, people were perfectly content to use a chamber pot and throw it out the window in the morning.

Either way, if a household contributes 66-75% or more of its income to basic necessities such as food, water, shelter, and clothing, that is considered bad off. If a poor person does not have children, they will not qualify for government assistance. In the United States, 13% of citizens live in this state despite the efforts of income re-distribution programs. However, it can be said that poverty rates today are lower than most other times in history (excepting the booming economy of the 1990s).

Interestingly enough, the economic growth of the United States has slowed down a great deal from the robust expansion of the mid-twentieth century. “The gross income of the average American family nearly doubled in real terms over the twenty-six years from 1947 to 1973 but increased by less than one-third over the twenty-seven years from 1973 to 2000. Equally striking, the latter period is distinguished from the former by a very different pattern of income growth across the income distribution. ”