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The concept of inequality is distinct from that of poverty [5] and fairness. Income inequality metrics (or income distribution metrics) are used by social scientists to measure the distribution of income, and economic inequality among the participants in a particular economy, such as that of a specific country or of the world in general.
As described in a section below, Theil-L is an income-distribution's dis-entropy per person, measured with respect to maximum entropy (which is achieved with complete equality). (In an alternative interpretation of it, Theil-L is the natural-logarithm of the geometric-mean of the ratio: (mean income)/(income i), over all the incomes.
Income ratios include the pre-tax national income share held by the top 10% of the population and the ratio of the upper bound value of the ninth decile (i.e., the 10% of people with the highest income) to that of the upper bound value of the first decile (the ratio of the average income of the richest 10% to the poorest 10%).
In economics, the consumption distribution or consumption inequality is an alternative to the income distribution or wealth distribution for judging economic inequality, comparing levels of consumption rather than income or wealth. [39] This is an important measure of inequality as the basic utility of the wealth or income is the expenditure. [40]
These social changes have caused substantial changes in household income distribution. The income Gini coefficient, claims Kwok, does not discern these structural changes in its society. [79] Household money income distribution for the United States, summarized in Table C of this section, confirms that this issue is not limited to just Hong Kong.
The curve is a graph showing the proportion of overall income or wealth assumed by the bottom x% of the people, although this is not rigorously true for a finite population (see below). It is often used to represent income distribution, where it shows for the bottom x% of households, what percentage (y%) of the total
A score of 1 would represent the case in which one person would have all the income and others would have none. Therefore, a lower Gini score is roughly associated with a more equal distribution of income and vice versa. In 2018 U.S. income inequality as measured by the Gini index was close to the highest recorded values ever. [15] [16]
On the issue of whether most Americans stay in the same income bracket over time, the 2011 CBO distribution of income study reported: Household income measured over a multi-year period is more equally distributed than income measured over one year, although only modestly so.