Introduction
The global distribution of income has changed dramatically since 1980. The figure below shows the world income distribution in 1980, where countries are ordered from poorest in red on the left to richest in green on the right. The height of each bar shows the average income in each decile within a country, ordered from the poorest 10% (at the front) to the richest 10% (at the back).
By 2014, which is the latest available data, many countries have changed their ranking, and the heights of the bars also become more unequal, with some very tall skyscrapers appearing.
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A pathway is a learning experience assembled like a storyline, consisting of different elements – for example, text with slideline figures and questions with immediate feedback. We suggest the order in which these elements should be presented to students, however, teachers have the flexibility to select some, and incorporate them to other material they are already using on LabXchange.
Getting started
In this visualization, you can explore how the income distribution within and between countries has changed over time.
You can use the slider to select a particular year, and the drop-down menu to select up to seven countries (you can also type in the country names to search for specific countries). To remove a country from the list, select it and press Delete or Backspace on your keyboard.
- The 'Skyscraper plot' tab shows the income distribution for your chosen countries as a 3D plot, where the heights of the bars show the average income in each decile.
- In the 'Lorenz curve' tab, you can see how much the income distribution for each country differs from a perfectly equal income distribution, and the associated Gini coefficient.
- The 'Rich/poor income ratio' tab allows you to compare countries according to another measure of inequality: how many times richer the richest people in a country are compared to the poorest.
Note that in the global skyscraper figures, the size of the country’s population is reflected in the width of its block. To enable up to seven countries to be compared, in this visualization, each country’s block is the same width.
Choose up to 7 countries
The 3D plot shows the average income in each decile for your chosen countries (annual income in 2005 USD). This measure of income takes into account changes in purchasing power over time. For more details, see Section 1.2 of The Economy.
For each country, the tallest bars show the average income of the richest 10%, and the shortest bars show the average income of the poorest 10%. Countries are ordered from left to right by average income in the year chosen, but are coloured according to their average income in 1980. The colour palette was chosen to emphasise the colour contrast between income quartiles.
You can click and drag the plot to read the axes values more clearly, and zoom in and out using the scroll function on your mouse or trackpad.
Note that in the global skyscraper figures, the size of the country’s population is reflected in the width of its block. To enable up to seven countries to be compared, in this visualization, each country’s block is the same width.
Key concepts
Gini coefficient - a measure of inequality of any quantity such as income or wealth, varying from a value of zero (if there is no inequality) to one (if a single individual receives all of it). Higher values of the Gini coefficient indicate greater inequality. The Gini coefficient is calculated as one-half times the average of the income differences between people in the population, divided by the average income of the population. It can be approximated by dividing the area enclosed by the Lorenz curve and the perfect equality line by the entire area under the perfect equality line (shown in red). For more information, read Unit 5 of The Economy.
Lorenz curve - a graphical representation of inequality of some quantity such as wealth or income. Individuals are arranged in ascending order by how much of this quantity they have, and the cumulative share of the total is then plotted against the cumulative share of the population. For complete equality of income, for example, it would be a straight line with a slope of one. The extent to which the curve falls below this perfect equality line is a measure of inequality.
Key concept
Rich/poor income ratio - the average income of the richest 10% in the population (10th decile) divided by the average income of the poorest 10% in the population (1st decile).
Note: Countries are coloured according to their average income in 1980. The colour palette was chosen to emphasise the colour contrast between income quartiles.