Quantitative Methods Blog: Financial Inequalities And Their Effect On The US Image

This article was included in the Economist and posed an interesting point in which the author sites the works of Janet Gornick, a writer for the New Yorker. The author begins this piece by explaining a chart that includes a value known as the Gini coefficient which is reflective of the amount of discrepancy that exists within any given country based upon the income of a nation’s average after taxation. This chart shows the United States as the nation with the highest income variation when compared with other selected nations.

The author then continues by summing up the stance Gornick, by reiterating her ideas in explaining the reasons for the discrepancies that exists in the comparison of the US with that of other countries. In essence, Gornick concludes that due to the differing structure that America operates upon, the US yields a different income variation than those of other countries. The author of this piece adds to this idea by adding alternative examples of how differently the US focuses upon public funding and taxation through the use of programs such as social security and public education.

Although this piece was well written in formulating reasons to explain the income discrepancies, the method of which Gornick goes about collecting and displaying data seems incomplete in showing all of the possible reasons that could attribute to the discrepancies. It would have been beneficial to include an alternate exhibit that noted the population size of each of these countries as well the resources available in each individual nation. Due to the vast amount of factors that each of the pieces of data are based upon, it is too presumptuous to rely solely on the outcome of the chart, in a further sense the chart is not fully representative on the official standing of each country. Each of these nations possesses a different amount of resources readily available so, it is not easy to simply compare the income variations that exist within and since they serve varying populations, it is even harder to conclude anything based upon these figures.

Through further research upon this topic, it was found that the United States is only one of many countries that retain an advantage based upon the natural resources available to them. From this study it was found that many countries that possess these advantages were not mentioned in the income discrepancy chart. One example is the nation of Saudi Arabia, who utilizes their nation’s oil reserves to generate revenue and holds a large portion of the market share of providing petroleum oil to the world. Furthermore, when one compares the inequalities posed by incomes by nations, it can be found that Mexico actually ranks higher than the US depending upon the source. Even though this article proved to be intriguing, it still lacks in a complete analysis.

**Gini coefficient, after taxes and transfers**^[13]

Country	mid-70s	mid-80s	around 1990	mid-90s	around 2000	mid-2000s	Late 2000s
Australia				0.309	0.317	0.315	0.336
Austria		0.236		0.238	0.252	0.265	0.261
Belgium		0.274		0.287	0.289	0.271	0.259
Canada	0.304	0.293	0.287	0.289	0.318	0.317	0.324
Chile				0.527		0.503	0.494
Czech Republic			0.232	0.257	0.260	0.268	0.256
Denmark		0.221	0.226	0.215	0.226	0.232	0.248
Estonia						0.349	0.315
Finland	0.235	0.209		0.218	0.247	0.254	0.259
France		0.300	0.290	0.277	0.287	0.288	0.293
Germany		0.251	0.256	0.266	0.264	0.285	0.295
Greece	0.413	0.336		0.336	0.345	0.321	0.307
Hungary			0.273	0.294	0.293	0.291	0.272
Iceland						0.257	0.301
Ireland		0.331		0.324	0.304	0.314	0.293
Israel		0.326	0.329	0.338	0.347	0.378	0.371
Italy		0.309	0.297	0.348	0.343	0.352	0.337
Japan		0.304		0.323	0.337	0.321	0.329
South Korea						0.306	0.315
Luxembourg		0.247		0.259	0.261	0.258	0.288
Mexico		0.452		0.519	0.507	0.474	0.476
Netherlands	0.263	0.272	0.292	0.297	0.292	0.284	0.294
New Zealand		0.271	0.318	0.335	0.339	0.335	0.330
Norway		0.222		0.243	0.261	0.276	0.250
Poland					0.316	0.349	0.305
Portugal	0.354		0.329	0.359	0.356	0.385	0.353
Slovak Republic						0.268	0.257
Slovenia						0.246	0.236
Spain		0.371	0.337	0.343	0.342	0.319	0.317
Sweden	0.212	0.198	0.209	0.211	0.243	0.234	0.259
Switzerland					0.279	0.276	0.303
Turkey		0.434		0.490		0.430	0.409
United Kingdom	0.268	0.309	0.354	0.336	0.351	0.331	0.345
United States	0.316	0.337	0.348	0.361	0.357	0.380	0.378