Culture

How Rich or Poor Are You, Really?

Especially relative to the wealth or poverty of others? Here’s a useful reality check.

By Crawford Kilian 11 Aug 2016 | TheTyee.ca

Crawford Kilian is a contributing editor of The Tyee.

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Here at The Tyee we worry a lot about income inequality, and so do many of our readers. But how well do we understand our own relative wealth or poverty, not to mention the wealth or poverty of others?

The Organization for Economic Cooperation and Development (OECD) offers a useful reality check on its website. It’s a tool called Compare your income. According to the OECD, “Statistics on income inequality often make the headlines but people don’t necessarily know how income is truly distributed.” The tool “allows you to see whether your perception is in line with reality. In only a few clicks, you can see where you fit in your country’s income distribution.”

You’re asked to indicate your gender and age, the country you live in, and your household. You provide the total after-tax income of your household. Then you estimate where you think you stand compared with other Canadians’ incomes, how our total incomes are distributed, and how you’d prefer to see them distributed.

The tool then shows how your opinion stacks up against statistical reality, and the answers may surprise you. (Whether or not you change your opinion is up to you.) The OECD also offers an explanation of its methodology and definitions – such as the definition of poverty: “We compute the income needed to be considered non-poor as half the median income of households of the same size of the respondent’s. The median income is the income that divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.”

National numbers on income distribution and poverty are based on an OECD database of 37 nations, covering data from 2001 to 2014. It includes each country’s Gini coefficient: where zero means complete income equality, and 1 means total inequality, Canada in 2013 had a Gini coefficient of 0.322, reflecting a slow, steady increase in inequality since at least 2006. By comparison, Finland’s coefficient in 2013 was 0.262 and the U.S.’s was 0.396.

Not all countries have entirely comparable data, but the database does provide at least some measure of relative income equality in those countries.

Whatever you may think of income inequality as a social and political issue, it helps to base your views on generally accepted statistics.  [Tyee]

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