Measuring inequality: The 20:20 ratio
“The first man who, having fenced in a piece of land, said “This is mine,” and found people naïve enough to believe him, that man was the true founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”
Jean-Jacques Rousseau, Discourse on the Origin of Inequality
Inequality refers to the unfair distribution of resources and opportunities among different members of a system or society. It may be a result of the member’s race, gender or etc. Economists categorize inequality in many subcategories, however, the two most important are income inequality and wealth inequality. There are many measures of inequality in a certain society, and of them is the 20:20 ratio.
The 20:20 ratio, which measure the income inequality, compares the average income of the top 20% richest of a given society to the poorest 20% of the society.
According to Wikipedia, “The 20:20 ratio for example shows that Japan and Sweden have a low equality gap, where the richest 20% only earn 4 times the poorest 20%, whereas in the UK the ratio is 7 times and in the US 8 times.”