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 three-dimensional visualizations of global income, 'skyscrapers' refer to the prominent columns representing the average income of the wealthiest 10% (the top decile) in the world's richest countries. A 2020 bar chart visualizes these skyscrapers by displaying the income for this top group in a selection of affluent nations. The chart is structured with three axes: one ordering countries from poorest to richest by 2020 GDP per capita, another showing the ten population income deciles, and a vertical axis for annual income in 2021 US dollars ranging up to \$400,000. For instance, data from 2020 shows the United Arab Emirates having the tallest skyscraper. In contrast, a country like Norway, despite its high GDP per capita, has a less prominent skyscraper, signifying a more even income distribution.

Visualizing Income Distribution: The 'Skyscrapers' of the Wealthiest Nations

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

A three-dimensional bar chart from 2020 specifically illustrates the income distributions of Somalia and the United Arab Emirates, which were identified as the poorest and richest countries, respectively. This visualization uses three axes: one that arranges countries by their 2020 GDP per capita, another for annual income in 2021 US dollars (up to \$400,000), and a third representing the ten income deciles of the population.

The Richest and Poorest Countries in 2020: Somalia and the United Arab Emirates

Decile groups are a statistical tool used to segment an ordered dataset, like a population ranked by a specific variable such as income, into ten equally-sized parts. The first decile group comprises the bottom 10% of observations (e.g., lowest incomes), while the tenth decile group contains the top 10% (e.g., highest incomes). The term 'deciles' refers specifically to the cutoff values that separate these ten groups. For instance, the first decile is the value that marks the boundary between the first and second decile groups.

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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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