{"id":241270,"date":"2023-08-14T12:00:52","date_gmt":"2023-08-14T11:00:52","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=241270"},"modified":"2023-08-08T06:14:59","modified_gmt":"2023-08-08T05:14:59","slug":"can-we-measure-inequality-without-tallying-the-wealth-of-the-wealthiest","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2023\/08\/can-we-measure-inequality-without-tallying-the-wealth-of-the-wealthiest\/","title":{"rendered":"Can We Measure Inequality without Tallying the Wealth of the Wealthiest?"},"content":{"rendered":"

Hundreds of prestigious economists don\u2019t think so. The World Bank, unfortunately, does.<\/em><\/strong><\/p><\/blockquote>\n

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\u201cBillionaires Row\u201d in New York City, 2020.
(Itrytohelp32, Wikimedia Commons, CC BY-SA 4.0)<\/p><\/div>\n

31 Jul 2023 – <\/em>Been eating a bit too much ice cream this sweltering summer? Thinking about going on a bit of a diet? Well, imagine yourself counting calories but exempting anything with sugar from all your counting.<\/p>\n

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Would that approach help you make an appreciable dent on your excess bodily baggage? Of course not. We can\u2019t eliminate what we ignore. And that goes for inequality as well, over 300 distinguished economists worldwide are charging in a new open letter<\/a> to the United Nations and the World Bank.<\/p>\n

Back in 2015, these eminent economists remind us, the world\u2019s nations came together and adopted<\/a> a series of \u201cSustainable Development Goals\u201d \u2014 SDGs for short \u2014 designed to systematically attack both poverty and climate change. The tenth of these goals specifically aims<\/a> to \u201creduce inequality within and among countries.\u201d<\/p>\n

The progress so far on this inequality SDG? Practically nonexistent. By many measures, the open-letter economists note, our \u201cinequalities have worsened,\u201d and that worsening really matters. Without reducing the \u201cdeep divide\u201d that separates our global rich from the rest of us, the economists suggest, we\u2019ll forever be going nowhere on \u201cending poverty and preventing climate breakdown.\u201d<\/p>\n

Significantly narrowing our world\u2019s deeply unequal distribution of income and wealth will, of course, always remain a tall order, given the political power that grand fortunes create. The World Bank, unfortunately, has made that order taller.<\/p>\n

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Institute for Policy Studies<\/p><\/div>\n

The UN\u2019s member nations have essentially made the bank the world\u2019s official inequality scorekeeper. But the metrics the World Bank uses to track inequality have turned out to be \u201cvery inadequate,\u201d charges Jayati Ghosh, a coauthor of the economists\u2019 new open letter.<\/p>\n

We already have, Ghosh points out<\/a>, a variety of established yardsticks for measuring inequality. The Gini coefficient plots actually existing income distributions between 0 for total equality and 1 for infinite inequality. The more easily understandable Palma ratio divides the income share of a society\u2019s top 10 percent by the income share of its bottom 40 percent.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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The World Bank isn\u2019t relying on either of these standard measures. The bank is instead pushing a statistical notion of \u201cshared prosperity\u201d that, as Ghosh puts it, \u201cleaves the rich out of the equation!\u201d This World Bank measure defines success in the battle against inequality as what we have when the incomes of the bottom 40 percent are growing faster than the national average income.<\/p>\n

On the World Bank\u2019s scorecard, in other words, any nation where the incomes of the top 1 percent are rising ten times faster<\/em> than the national average income would be making \u201cprogress\u201d against inequality so long as the incomes of the bottom 40 percent were rising slightly faster than that national average.<\/p>\n

This \u201cbizarre notion of \u2018shared prosperity,\u2019\u201d says Jayati Ghosh, \u201cprovides very misleading estimates of the extent of inequality or progress in reducing it.\u201d<\/p>\n

By this bizarre World Bank yardstick, over half the world \u2014 53 percent of the nations the bank sampled \u2014 were making progress against inequality just before the pandemic hit and another 11 percent were showing no change.<\/p>\n

Researchers with the World Inequality Database, an ambitious statistical effort<\/a> that takes inspiration from the ground-breaking research of scholars like Thomas Piketty, paint a starkly different picture. Only 26 percent of the world\u2019s nations, as measured by the Gini coefficient, are actually showing progress against income inequality, and only 12 percent are showing progress in Palma-ratio terms.<\/p>\n

For three top global inequality watchdogs \u2014 Oxfam, the Development Finance International, and the New York University Center for International Cooperation\u2019s Pathfinders initiative \u2014 the World Bank\u2019s \u201cshared prosperity\u201d scorekeeping makes plain the need for a real \u201cdata revolution\u201d that spotlights the wealth of the world\u2019s wealthiest.<\/p>\n

The World Bank\u2019s current approach, these three groups charged<\/a> in a new report released last month, essentially \u201cignores what is happening to the rich.\u201d We cannot afford that ignoring, the groups stress, not at a time when \u201cthe world\u2019s wealthiest citizens continue to be largely responsible for extreme carbon emissions\u201d while the world\u2019s \u201cpoorest citizens pay the price through climate disasters.\u201d<\/p>\n

Will critiques like this get the World Bank to change its statistical ways? We\u2019ll see. The bank\u2019s first reaction to the economists\u2019 open letter has been somewhat encouraging. The World Bank, says<\/a> a spokesperson, agrees \u201cwe need to do more to address inequality\u201d and \u201cdo better in measuring progress.\u201d<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Sam Pizzigati co-edits inequality.org. His latest books include <\/em>The Case for a Maximum Wage<\/a> and <\/em>The Rich Don\u2019t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970<\/a>.<\/p>\n

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Go to Original – inequality.org<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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