August 29, 2022
Other Article
Harvard Business School Working Knowledge

Income Inequality Is Rising. Are We Even Measuring It Correctly?

By: Jon M. Jachimowicz, K. Blesch and Oliver P. Hauser

Format:Electronic

Abstract

Income inequality is on the rise in many countries around the world, according to the United Nations. What’s more, disparities in global income were exacerbated by the COVID-19 pandemic, with some countries facing greater economic losses than others. Policymakers are increasingly focusing on finding ways to reduce inequality to create a more just and equal society for all. In making decisions on how to best intervene, policymakers commonly rely on the Gini coefficient, a statistical measure of resource distribution, including wealth and income levels, within a population. The Gini coefficient measures perfect equality as zero and maximum inequality as one, with higher numbers indicating a greater concentration of resources in the hands of a few. This measure has long dominated our understanding of what inequality means, largely because this metric is used by governments around the world, is released by statistics bureaus in multiple countries, and is commonly discussed in news media and policy discussions alike. In our paper, recently published in Nature Human Behaviour, we argue that researchers and policymakers rely too heavily on the Gini coefficient—and that by broadening our understanding of how we measure inequality, we can both uncover its impact and intervene to more effectively correct it.

Keywords

Income Inequality; Gini Coefficient; COVID-19 Pandemic; Government Administration; Equality and Inequality; Health Pandemics; Measurement and Metrics

Citation

Jachimowicz, Jon M., K. Blesch, and Oliver P. Hauser. "Income Inequality Is Rising. Are We Even Measuring It Correctly?" Harvard Business School Working Knowledge (August 29, 2022).