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Discussion #20 - The Gini Coefficient

The Gini is starting to come out of the bottle (lol). Very few people have even heard of this index, but it's quite fascinating! A global measurement of economic inequality (by country or the entire planet). Created by an Italian Statistician & Sociologist Corrado Gini in 1912, this interesting metric is just recently beginning to get some attention from the general public (thanks to Occupy Wall St.).

This powerful index, which could/should be one of the most useful economic tools in human history, is instead the most misunderstood & misleading (for the few who know it exists). Used by many experts, including the CIA & World Bank, here are some reasons for all the confusion.

1. It's measured as "0" representing perfect equality, or every person having the same. A score of "1" represents perfect inequality, or 1 person having it all in a given society. A common mistake I see a lot, is the use of 0-100, instead of 0-1 (not a big deal).

2. A much bigger deal, is that there are 2 main Gini Coefficient measurements; one for income, & one for wealth. If you google them, you will see reams of info on the income Gini, & very little on the wealth Gini. This is unfortunate, as the wealth Gini is far more important. It represents total net worth instead of just income (per year). As well, further confusion results from different forms of income being excluded from certain income Gini's, such as investment income (a biggie for most ultra-wealthy). The wealth Gini numbers are much higher, & are a more accurate indication of the actual gap.

A healthy economic range for the income metric is .30 to .40, globally we are currently sitting at approx. .70 & rising. The wealth Gini for the entire planet is sitting at somewhere between .85 & .90 & rising (was .80 ish in 2000). The numbers vary a little depending on the source.

The Gini has spoken; the game is starting to spiral out of control, & globalization is making it worse (in all countries). We are heading towards a global plutocracy, where the wealthy class rules (or at least has all the power). Occupy Wall St. has ended, yet the problem marches on (unabated). Violence is not the answer, communication & political will is. Ignorance is not bliss. If the 77% (near-poor & poor globally) are ok with having their lifespan (time & health) sucked up with a big straw for peanuts, then complacency is the best way to ensure it will happen. (The middle class is vulnerable too).
Discussion #20 - The Gini Coefficient

The Gini is starting to come out of the bottle (lol). Very few people have even heard of this index, but it's quite fascinating! A global measurement of economic inequality (by country or the entire planet). Created by an Italian Statistician & Sociologist Corrado Gini in 1912, this interesting metric is just recently beginning to get some attention from the general public (thanks to Occupy Wall St.).

This powerful index, which could/should be one of the most useful economic tools in human history, is instead the most misunderstood & misleading (for the few who know it exists). Used by many experts, including the CIA & World Bank, here are some reasons for all the confusion.

1. It's measured as "0" representing perfect equality, or every person having the same. A score of "1" represents perfect inequality, or 1 person having it all in a given society. A common mistake I see a lot, is the use of 0-100, instead of 0-1 (not a big deal).

2. A much bigger deal, is that there are 2 main Gini Coefficient measurements; one for income, & one for wealth. If you google them, you will see reams of info on the income Gini, & very little on the wealth Gini. This is unfortunate, as the wealth Gini is far more important. It represents total net worth instead of just income (per year). As well, further confusion results from different forms of income being excluded from certain income Gini's, such as investment income (a biggie for most ultra-wealthy). The wealth Gini numbers are much higher, & are a more accurate indication of the actual gap.

A healthy economic range for the income metric is .30 to .40, globally we are currently sitting at approx. .70 & rising. The wealth Gini for the entire planet is sitting at somewhere between .85 & .90 & rising (was .80 ish in 2000). The numbers vary a little depending on the source.

The Gini has spoken; the game is starting to spiral out of control, & globalization is making it worse (in all countries). We are heading towards a global plutocracy, where the wealthy class rules (or at least has all the power). Occupy Wall St. has ended, yet the problem marches on (unabated). Violence is not the answer, communication & political will is. Ignorance is not bliss. If the 77% (near-poor & poor globally) are ok with having their lifespan (time & health) sucked up with a big straw for peanuts, then complacency is the best way to ensure it will happen. (The middle class is vulnerable too).