The rich/poor ratio introduced in this context is conceptually similar to—but not identical to—a widely recognized measure of inequality known as the 90/10 ratio. The 90/10 ratio is calculated as the ratio of the income of an individual at the ninetieth percentile to that of an individual at the tenth percentile. In contrast, the rich/poor ratio compares the average income of the top decile (the "rich") to that of the bottom decile (the "poor").

The key distinction lies in the composition of the deciles. The top decile encompasses all individuals whose income exceeds that of the person at the ninetieth percentile, resulting in an average that is higher than the income of the individual at that percentile. Similarly, the bottom decile consists of all individuals with income below that of the person at the tenth percentile, yielding an average that is lower than the income of the individual at that percentile. Consequently, the rich/poor ratio tends to yield a larger value than the 90/10 ratio for a given country.

The 90/10 Ratio

In the visualization of Figure 1.5, each country is shown with ten bars, where each bar signifies an income decile group representing 10% of the population. The average income for that group, measured in 2021 US dollars, determines the height of its bar. The layout arranges the deciles spatially, from the poorest 10% of people at the front of the diagram to the wealthiest 10% at the back.

Representation of Income Deciles in Figure 1.5

The 1980 global income distribution is depicted in the top panel of Figure 1.5 using a three-dimensional bar chart. This chart organizes countries from poorest to richest by their 1980 GDP per capita on one axis, shows ten income deciles per country on another, and displays annual income (in 2021 US dollars) on the vertical axis. It offers a detailed overview of global income distribution for that year, highlighting specific countries as examples.

World Income Distribution in 1980 (Figure 1.5, Top Panel)

A three-dimensional bar chart illustrates the global income distribution for the year 2000. The visualization is structured along three axes: the first axis arranges countries from poorest to richest based on their 2000 GDP per capita; the second axis indicates annual income in 2021 US dollars, ranging up to \$400,000; and the third axis represents the ten income deciles of each country's population. The chart shows the income distribution for all countries in the world, with a selection of nations labeled for reference.

World Income Distribution in 2000

In visualizations of global income distribution, the term 'skyscrapers' refers to the exceptionally tall bars representing the average income of the wealthiest 10% of the population in the richest countries. These bars are typically located at the back and on the right-hand side of the chart, corresponding to the highest income decile of high-income nations.

The 'Skyscrapers' in Global Income Distribution Visualizations

A 3D bar chart from 2020 visualizes the extremes of global income by exclusively showing the distributions for Somalia, the poorest country by GDP per capita, and the United Arab Emirates, the richest. The chart is structured with three axes: one ordering countries by GDP per capita, a vertical axis for annual income in 2021 US dollars (ranging from \$0 to \$400,000), and a third axis representing the ten income deciles of the population. This visualization starkly contrasts the income levels across all population segments in the two nations.

Visualization of Income Extremes in 2020: Somalia and the United Arab Emirates

Decile groups are a method for dividing a set of observations, such as a population ordered by income, into ten equally-sized segments. The first decile group represents the bottom 10% of observations (e.g., the lowest incomes), and the tenth decile group represents the top 10%. The term 'deciles' refers to the specific cutoff values that separate these ten groups; for example, the first decile is the value that separates the bottom 10% from the next 10%.

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To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

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