Two countries, A and B, have the same overall numerical measure of income inequality. However, the nature of their inequality differs. In Country A, the top 1% of earners hold 50% of the national income, with the remaining income distributed relatively evenly among the other 99%. In Country B, the bottom 50% of the population earns almost no income, with the national income being distributed among the top 50%. How would the graphical curves representing their income distributions, plotted against a line of perfect equality, most likely differ?

Analyzing Inequality Beyond a Single Metric

Evaluating Single-Metric Measures of Inequality

Match each description of a society's income distribution with the shape of the curve that would represent it graphically. In these graphs, the horizontal axis represents the cumulative percentage of the population (from poorest to richest), and the vertical axis represents the cumulative percentage of total income they hold. A straight diagonal line represents perfect equality.

If two countries have an identical numerical value for their overall level of income inequality, it can be concluded that the underlying pattern of income distribution is the same in both nations.

Interpreting Income Distribution Patterns

Interpreting Different Patterns of Inequality

Consider two countries, A and B, which have the exact same numerical score on a common single-metric measure of income inequality. When their income distributions are plotted graphically (with cumulative % of population on the x-axis and cumulative % of income on the y-axis), their curves look different. Country A's curve is very flat for the first 50% of the population before rising steeply. Country B's curve closely follows the line of perfect equality for the first 90% of the population before deviating sharply. What is the most accurate analysis of the nature of inequality in these two countries?

Evaluating Policy with Incomplete Data

Limitations of Single-Metric Inequality Measures