A number of years ago I discovered a funny term called the GINI index. While it sounds rather technical, it is a fairly simple measurement which assesses the gap between the rich and poor. For example, if your country has a very high GINI score (like Brazil), the wealth of the country is in the hands of very few people (and we repeatedly heard this theme during the recent Summer Olympic broadcasts). In contrast, a nation like Austria has a very low GINI index. This means there is less income disparity between the wealth and the poor.
The GINI index was developed by Corrado Gini, an Italian statistician, sociologist and demographer in 1912 as a measure of inequality of income or wealth. In practice it is as an index which ranges between 0 and 1 with 0 being perfect equality of income (everyone has the same amount of money) and 1 being perfect inequality of income (one person has all the money, everyone else has none). The Gini index is actually the one of the most common measurements able to describe inequality.
The calculation of GINI index is quite simple. For a country or region, first you need to understand the income distribution of its people. The more wealth is concentrated in fewer hands the more unequal the GINI index will be. After you have an understanding of how income is distributed among the people of a country you simply calculate each individuals’ share as a percentage of total income and then add them together. The more people who have a share of the total income equaling 100% then, logically, the worse off that nation is as a whole.
Education is often associated with improved GINI index because those who are educated typically earn higher incomes and better quality jobs which results in less economic disparity among citizens. In many countries inequality has increased in recent decades, in China for example it has increased by 22% in the past 10 years. The GINI index is a good way to measure not only income differences between countries but also within them.
Beyond being a fascinating statistic, there is an important warning that the GINI index provides – it has proven to be a strong predictor of social and political unrest! When the GINI index is high a country is ripe for violence, rebellion and protests. The opposite is true when there is a low score. Today’s blog provides some great trend insights from Shaping Tomorrow about changes in global economic equality. Here are 15 inequality trends to keep an eye on!
“Growing wealth gaps are the biggest threat to global sustainability today and inequality can be expected to increase. Economic inequality will likely reach unprecedented levels. Here are some issues and potential solutions that we must all work to solve or suffer the potential consequences”.
Jeff Suderman is a futurist, consultant, and professor who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman Email: jeff@jeffsuderman.com
Source: Shaping Tomorrow
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