Distribución: Intuiciones Básicas

Xavi R

amos:

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conomía de la P

obreza y la Desigualdad

Econom

ía de la Pobreza y la D

esigualdad

Distribución: Intuiciones Básicas

Economía de la Pobreza y la Desigualdad Economía de la Pobreza y la Desigualdad

Xavi RamosXavi Ramos

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conomía de la P


Econom


esigualdad

Índice

¿Igualdad de qué?¿Igualdad de qué? Renta, bienestar y utilidadRenta, bienestar y utilidad Comparación de bienestarComparación de bienestar Funciones de bienestar socialFunciones de bienestar social RankingsRankings Necesidades y dominanciaNecesidades y dominancia

¿Igualdad de qué?¿Igualdad de qué?

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conomía de la P


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Introducción

Empecemos analizando una Empecemos analizando una distribución de forma intuitiva con distribución de forma intuitiva con instrumentos básicos y datos reales.instrumentos básicos y datos reales.

Usaremos la distribución de la rentaUsaremos la distribución de la renta … … ¿qué renta?¿qué renta?

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What do we know? – data

Try a simple thought experiment Try a simple thought experiment Use the Current Population Survey dataUse the Current Population Survey data

See See DeNavas-Walt et al (2005) Data, descriptions and computationsData, descriptions and computations

Just take standard definitionsJust take standard definitions Do everything in 2004 dollarsDo everything in 2004 dollars Focus on income of householdsFocus on income of households

What do the data tell us?What do the data tell us? Key tablesKey tables Begin with Table A-1Begin with Table A-1

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Definición de la renta utilizada? 1. Earnings1. Earnings 2. Unemployment compensation2. Unemployment compensation 3. Workers’ compensation3. Workers’ compensation 4. Social security4. Social security 5. Supplemental security income5. Supplemental security income 6. Public assistance6. Public assistance 7. Veterans’ payments7. Veterans’ payments 8. Survivor benefits8. Survivor benefits 9. Disability benefits9. Disability benefits 10. Pension or retirement income10. Pension or retirement income

11. Interest11. Interest 12. Dividends12. Dividends 13. Rents, royalties, estates & trusts13. Rents, royalties, estates & trusts 14. Educational assistance14. Educational assistance 15. Alimony15. Alimony 16. Child support16. Child support 17. Financial assistance from outside 17. Financial assistance from outside

the householdthe household 18. Other income18. Other income

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conomía de la P


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Lagunas en nuestra definición Cubre la renta monetaria recivida Cubre la renta monetaria recivida

Con excepción de algunas fuentes como los incrementos de capitalCon excepción de algunas fuentes como los incrementos de capital

Antes de deduccionesAntes de deducciones Impuestos individuales directos Impuestos individuales directos Contribuciones a la SS y sindicatosContribuciones a la SS y sindicatos Contribuciones para MedicareContribuciones para Medicare

No incluye remuneraciones en especieNo incluye remuneraciones en especie Vales alimanícios (food stamps)Vales alimanícios (food stamps) Atención sanitariaAtención sanitaria Subsidios a la viviendaSubsidios a la vivienda Auto-consumoAuto-consumo Remuneración en especie de la actividad económica,Remuneración en especie de la actividad económica, Contribuciones empresariales a planes de pensiones.Contribuciones empresariales a planes de pensiones.

Veamos una primera ilustración de la distribución …Veamos una primera ilustración de la distribución …

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conomía de la P


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A snapshot viewunder

$5,000$5,000 -$9,999

$10,000 -$14,999

$15,000-$24,999

$25,000-$34,999

$35,000-$49,999

$50,000 -$74,999

$75,000-$99,999

$100,000 and over

1967 5.1 8.5 7.6 14.7 16 21.9 17.3 5.2 3.7

1974 2.7 7.7 7.8 14.4 14.3 19 20.7 7.9 5.5

1984 3 7.2 7.9 14.1 13.5 17 19.4 9.6 8.4

1994 3.1 6.6 7.4 13.8 12.7 15.8 18.2 10.7 11.7

2004 3.5 5.2 6.7 12.9 11.9 14.8 18.3 11 15.7

Gives proportions of households in each income category, Gives proportions of households in each income category, year by yearyear by year

Straight from the official tableStraight from the official table Cut down to manageable number of yearsCut down to manageable number of years omitted population totalsomitted population totals

But, check in a diagramBut, check in a diagram standard frequency polygon….standard frequency polygon….

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conomía de la P


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esigualdad

Representing the distribution?

0

5

10

15

20

25

$2,500

$7,500

$12,500

$20,000

$30,000

$42,500

$62,500

$87,500

$550,000

1967

1974

1984

1994

2004

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conomía de la P


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Questions Mixed messages from this illustrationMixed messages from this illustration

Shifts over time make sense…Shifts over time make sense… ……income growthincome growth But weird stuff on the right…But weird stuff on the right… ……arises from arbitrary groupingarises from arbitrary grouping

Get more insight from a better representation Get more insight from a better representation Use the concept of quantileUse the concept of quantile

includes well-known conceptsincludes well-known concepts median, quartiles etcmedian, quartiles etc a “boundary” incomea “boundary” income

Examine Examine DeNavas-Walt et al (2005) Table A-3Table A-3 Do this for 1974, 2004Do this for 1974, 2004 Check out the growthCheck out the growth

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conomía de la P


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Quantile Incomes by Households

1974

10% $9,741

20% $16,285

50% $37,519

80% $64,781

90% $83,532

95% $102,534

2004

$10,927

$18,500

$44,389

$88,029

$120,924

$157,185

Growth

12.2%

13.6%

18.3%

35.9%

44.8%

53.3%

More detail.More detail.

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amos:

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conomía de la P


Econom


esigualdad

Quantiles: 1967 – 2004

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

1965 1970 1975 1980 1985 1990 1995 2000 2005

q.10

q.20

q.50

q.80

q.90

q.95

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conomía de la P


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esigualdad

The Parade: quantiles vs population

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

0 0.2 0.4 0.6 0.8 1proportion of population

in

com

e

1974

2004

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conomía de la P


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Inequality from quantiles? But does this way of representing distributions tell us But does this way of representing distributions tell us

about inequality?about inequality? Clear that growth is lopsidedClear that growth is lopsided

……top decile grew by almost four times as much four times as top decile grew by almost four times as much four times as much as bottommuch as bottom

Suggests increase in inequality?Suggests increase in inequality? (whatever that may be)(whatever that may be)

We can also use quantiles to derive simple inequality We can also use quantiles to derive simple inequality measuresmeasures eg “90/10” ratioeg “90/10” ratio (increased from 8.6 to 11.1)(increased from 8.6 to 11.1) or ratios to medians…or ratios to medians…

Have a look at path of these ratios…Have a look at path of these ratios… … … and then think againand then think again

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conomía de la P


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esigualdad

Quantile ratios: US 1967 – 2004

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1965 1970 1975 1980 1985 1990 1995 2000 2005

q.95/q.50

q.90/q.50

q.80/q.50

q.20/q.50

q.10/q.50

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conomía de la P


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Overview...

Income distribution

Inequality

Poverty

Methods

Inequality and Poverty: Agenda

More of what we know about the US… and elsewhere

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Fuller income information

Focus on additional income from same sourceFocus on additional income from same source DeNavas-Walt et al (2005) Table A-3Table A-3

Again, we don’t question the definitionsAgain, we don’t question the definitions household income before deductionhousehold income before deduction income receiver: household income receiver: household

Divide distribution up into five equal slicesDivide distribution up into five equal slices Compute mean income of each 20% sliceCompute mean income of each 20% slice

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1974

1st 20% $9,324

2nd 20% $23,176

3rd 20% $37,353

4th 20% $53,944

5th 20% $95,576

Overall $43,875

2004

$10,264

$26,241

$44,455

$70,085

$151,593

$60,528

Growth

10.1%

13.2%

19.0%

29.9%

58.6%

38.0%

Mean incomes by groups of households

More detail.More detail.

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conomía de la P


Econom


esigualdad

Differential growth of mean incomesMean Incomes US

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

1965 1970 1975 1980 1985 1990 1995 2000 2005

Lowest 20%Second 20%Third 20%Fourth 20%Highest 20%

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conomía de la P


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Three alternative views

First, plot these mean incomes cumulativelyFirst, plot these mean incomes cumulatively Plot against population sharesPlot against population shares Do this for any given yearDo this for any given year Get a powerful toolGet a powerful tool

Second, plot income shares against timeSecond, plot income shares against time Divide each group mean by overall meanDivide each group mean by overall mean Graph these for whole periodGraph these for whole period Lopsided growth?Lopsided growth?

Third plot income shares against population sharesThird plot income shares against population shares Do this for any given yearDo this for any given year Get a very powerful toolGet a very powerful tool

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conomía de la P


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esigualdad

1: The Generalised Lorenz Curve

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000


in

com

e

1974

2004

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conomía de la P


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0

10

20

30

40

50

60

1965 1970 1975 1980 1985 1990 1995 2000 2005

s1

s2

s3

s4

s5

2: Income shares: US 1967-2004

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2: Top income shares in US

0

5

10

15

20

25

30

35

40

45

50

19

13

19

17

19

21

19

25

19

29

19

33

19

37

19

41

19

45

19

49

19

53

19

57

19

61

19

65

19

69

19

73

19

77

19

81

19

85

19

89

19

93

19

97

P90–100

P99–100CG excl

P99–100CG Incl

Piketty, T. and E. Saez (2003) “Income inequality in the United States, 1913-1998,” Quarterly Journal of Economics, 118, 1-39.

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3: Lorenz curve

0

0.2

0.4

0.6

0.8

1


prop

ortio

n of

inco

me

1974

2004

Equality

Natural Natural interpretation in interpretation in terms of sharesterms of shares

Gives a natural Gives a natural definition of the Gini definition of the Gini coefficientcoefficient

Use this to have a Use this to have a quick look at quick look at inequality in inequality in different countries…different countries…

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Lorenz around the world…

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Proportion of population

Pro

po

rtio

n o

f In

com

e

Sweden 2000 inc 25

India 1999–00 exp 32.5

United States 2000 inc 40.8

China 2001 exp 44.7

Russia 2000 exp 45.6

Brazil 1998 inc 59.1

Get full versionGet full version

SourceSource World Bank (2004)World Bank (2004)

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Income or consumption?Gini coefficient

Year Consumption IncomeAlbania 1996 0.252 0.392

Bulgaria 1995 0.274 0.392Bangladesh 2000 0.334 0.392

Vietnam 1998 0.362 0.489Nepal 1996 0.366 0.513

Morocco 1998 0.390 0.586Nicaragua 1998 0.417 0.534

Thailand 2000 0.428 0.523Peru 1994 0.446 0.523

Panama 1997 0.468 0.621Russia 1997 0.474 0.478Brazil 1996 0.497 0.596

SeeSee World Bank (2005)World Bank (2005)

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España, 1985-1996

Micro data: ECPF 1985-1996Micro data: ECPF 1985-1996

Data shortcomings: underreporting of income dataData shortcomings: underreporting of income data

Income definition: real net equivalised annual incomeIncome definition: real net equivalised annual income

NetNet: of S.S. contributions and direct taxes (IRPF): of S.S. contributions and direct taxes (IRPF)

RealReal: Use RPI for each income decile: Use RPI for each income decile

Equivalence scaleEquivalence scale: OECD’s: OECD’s

Distribución: Intuiciones Básicas

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