Rich/poor ratio

Income deciles

One way to study inequality within a country is to compare income groups. Deciles are one way of doing this by dividing the population into ten groups by income level, each containing the same number of people. A person in the top decile would be among the top 10% of earners, while a person in the lowest decile would be among the lowest 10% of earners. Deciles are one of many ways to obtain descriptive information from a distribution. We can also define percentiles (one hundred groups each containing 1% of the population) and quartiles (four groups each containing 25% of the population).

In the figure below, each line represents the average post-tax income in each of the ten deciles. The lowest line is the average income of the first decile (poorest 10%) and the highest line is the average income of the top decile (richest 10%). Use the dropdown menu and slider to choose a country and time period so you can see how the distribution of income evolved over time. This data was obtained from the World Inequality Database.

Rich/poor ratio

Income deciles are difficult to compare across countries. As an alternative, the rich/poor ratio divides the average income of the richest 10% by the average income of the poorest 10%.

In 2020, even in a relatively equal country such as Norway, the rich/poor ratio was 66. This means the average income of the richest 10% in Norway was 66 times as great as the average income of the poorest 10%. In comparison, the rich/poor ratio in the US was 244 and in Botswana it was 488.

Use the interactive graph below to compare rich/poor ratios across space and time. Add as many countries as you would like.

90/10 ratio

Another common inequality measure is the 90/10 ratio. Instead of using the average income within deciles, the 90/10 ratio compares the poorest person in the top decile to the richest person in the bottom decile. This is helpful because the top earners in the highest decile and the bottom earners in the lowest decile can skew their deciles’ average income, and thus the rich/poor ratio.

The 90/10 ratio will always be smaller than the rich/poor ratio. For example, suppose that the incomes of the people in the top decile range from $200,000 to $1.5 million per year, and the incomes of those in the bottom decile range from $0 to $10,000 per year. The 90/10 ratio will simply be $200,000/$10,000 = 20. Remember, the rich/poor ratio’s numerator is the average income of the top decile. In this case, that means it will be an average of all the incomes between $200,000 and $1.5 million. This average will always be greater than the $200,000 value we used as the numerator of the 90/10 ratio, because $200,000 is the lowest income in the top decile. Similarily, the denominator will be an average of the incomes between $0 and $10,000, which will always be less than $10,000. As a result, the rich/poor ratio will be greater than the 90/10 ratio.