Friday, May 31, 2013

Index of Inequality?

On May 28, 2013, The Economist published a graphic that supports my idea of opening "income-scissors", i.e., of widening income gaps in the "Western World". The chart below presents what the editors term the better-life index. It should give a closer indication of the well-being of people than the Gross Domestic Product (GDP) generally used when classifying the wealth of countries.

Better-life index (©The Economist)
The Organization for Economic Co-operation and Development (OECD) has assembled several indicators in various countries over the last three years like as usual jobs, unemployment, and personal income but in addition housing, education, environment, satisfaction in life, safety, and civic engagement. The Economist then took the rough data considering how the upper 10% and the lower 10% of the people with respect to income and education fare in a given society.

I still remember the years after the war when Germany might have figured around an absolute better-life index of 0.4. However, it is not the absolute value that intrigues me but the gap between the upper 10% and the lower 10% with respect to their socioeconomic status. This must have been much lower than 0.1 in Germany when I was young.

As a student during my frequent trips to Italy I recognized a different world. I noticed enormous differences in the lifestyle of high-society and poor people. Today Italy figures on the chart of the better-life index somewhere in the middle, the gap between the two poles being only around 0.17.

The US is on top but the opening of the gap for its better-life index is wide being about 0.24. Germany's absolute index is lower than that for the States (remember, Germans always complain!) but the gap between the upper 10 % and the lower 10 % is 0.21, nearly as wide as for the US.
Will he haunt the capitalistic world afresh?

I want to single out two countries showing small gaps around 0.11. One is Japan, a country where I worked in 1986 for three months. Japan is a traditionally homogeneous society where apparently the less fortunate people do not consider themselves to be much worse off their wealthier country fellows.

The other country is Poland, which I just visited, a country on the move trying to find its way in Europe between tradionalism and an open western society. Polish people think high and those at the lower end have not given up their hopes for a higher better-life index in the near future. The question is, will we see in Poland an increase of the gap over the coming years?

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