Deciles

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Deciles

Deciles are a simple way to measure inequality.[1]  [2] This page describes deciles using an example of income inequality.

The main idea is that deciles show how income is distributed, how much of the total income in a country is earned by lower wage earning groups and how much of the total income is earned by higher wage earning income groups. If the people in the top and bottom groups earn the same proportion of the income, then there is income equality. If the top groups earns a much higher percent of the total income, while people in the bottom groups earn much lower percent of the total income, then there is inequality.

The tables below show how deciles are calculated.

In table 1, all of the people in two "countries", A and B are sorted and listed in the order of the amount of income they earn. In country A, person 1 earns $1, person 2 earns $1, and so on up to person 100, who earns $890.  In this country of 100 people, the first 10 people are the first 10% of the total population, or the first decile. These first 10 people earn a total of $18, which is 0.13% of the total income of the country. The next 10 people together earn $91, or 0.68% of the total income in that country. On the other hand, the first 10 people in country B, together, earn 1.28% of the country's income, a slightly higher percent, while the second 10 people together earn 3.83% of the total income of that country.

Table two just shows the deciles. As can be seen, the top 10 wage earners in country A, or the top decile, earn 53% of the country's income, while the top decile in country B earns 15% of the country's income. There is a very high degress of inequality in country A, since only 10% of the population, or a single decile, earns more than half of the income. There is some degree of inequality in country B, since the top decile earns more than does the bottom decile, but not as much inequality.

Tables

                                                                                                               Table 1
                                                                                                     Income by Individual


            Distribution of income in county A                                                                Distribution of income in country B

Decile

'

Person


Income


Income of

Decile

Decile Income as

% of Total Income

         




































































































Decile


Person


Income


Income of

Decile

Decile Income as 

% of Total Income


1 $1


1 $1


2 $1


2 $1


3 $1


3 $1


4 $1


4 $1


5 $1


5 $1


6 $1


6 $1


7 $1


7 $1


8 $1


8 $1


9 $5


9 $1

1st decile 10 $5 $18 0.13% 1st decile 10 $1 $10 1.28%

11 $5


11 $1


12 $6


12 $1


13 $7


13 $3


14 $8


14 $3


15 $8


15 $3


16 $9


16 $3


17 $11


17 $4


18 $12


18 $4


19 $12


19 $4

2nd decile 20 $13 $91 0.68% 2nd decile 20 $4 $30 3.83%

21 $14


21 $5


22 $14


22 $5


23 $15


23 $5


24 $16


24 $5


25 $21


25 $5


26 $22


26 $5


27 $23


27 $5


28 $23


28 $6


29 $25


29 $6

3rd decile 30 $25 $198 1.47% 3rd decile 30 $6 $53 6.76%

31 $35


31 $6


32 $45


32 $6


33 $46


33 $6


34 $47


34 $6


35 $47


35 $6


36 $47


36 $6


37 $48


37 $7


38 $48


38 $7


39 $57


39 $7

4th decile 40 $58 $478 3.56% 4th decile 40 $7 $64 8.16%

41 $59


41 $8


42 $59


42 $8


43 $61


43 $8


44 $62


44 $8


45 $63


45 $8


46 $64


46 $8


47 $65


47 $8


48 $76


48 $8


49 $77


49 $8

5th decile 50 $78 $664 4.94% 5th decile 50 $8 $80 10.20%

51 $78


51 $8


52 $79


52 $8


53 $79


53 $8


54 $82


54 $9


55 $82


55 $9


56 $83


56 $9


57 $85


57 $9


58 $86


58 $9


59 $86


59 $9

6th decile 60 $86 $826 6.15% 6th decile 60 $9 $87 11.10%

61 $87


61 $11


62 $87


62 $11


63 $88


63 $11


64 $88


64 $11


65 $88


65 $11


66 $92


66 $11


67 $93


67 $11


68 $93


68 $11


69 $94


69 $11

7th decile 70 $95 $905 6.74% 7th decile 70 $11 $110 14.03%

71 $96


71 $11


72 $96


72 $11


73 $97


73 $11


74 $97


74 $11


75 $97


75 $11


76 $98


76 $11


77 $98


77 $11


78 $98


78 $11


79 $99


79 $11

8th decile 80 $120 $996 7.41% 8th decile 80 $11 $110 14.03%

81 $130


81 $12


82 $150


82 $12


83 $155


83 $12


84 $170


84 $12


85 $181


85 $12


86 $222


86 $12


87 $223


87 $12


88 $224


88 $12


89 $331


89 $12

9th decile 90 $342 $2,128 15.84% 9th decile 90 $12 $120 15.31%

91 $532


91 $12


92 $555


92 $12


93 $567


93 $12


94 $678


94 $12


95 $688


95 $12


96 $777


96 $12


97 $778


97 $12


98
$779


98 $12


99 $888


99 $12

10th decile 100 $890 $7,132 53.08% 10th decile 100 $12 $120 15.31%



                                                                                                                              Table 2

                                                                                                                        Income by Decile

            Distribution of income in county A                                                                           Distribution of income in country B

Decile                    

People in      

Decile          

Income in       

the Decile      

Decile Income as 

% of Total Income

           ' Decile                

People in      

Decile           

Income in        

the Decile       

Decile Income as 

% of Total Income

1st decile 10 $18 0.13%
1st decile 10 $10 1.28%
2nd decile 10 $91 0.68%
2nd decile 10 $30 3.83%
3rd decile 10 $198 1.47%
3rd decile 10 $53 6.76%
4th decile 10 $478 3.56%
4th decile 10 $64 8.16%
5th decile 10 $664 4.94%
5th decile 10 $80 10.20%
6th decile 10 $826 6.15%
6th decile 10 $87 11.10%
7th decile 10 $905 6.74%
7th decile 10 $110 14.03%
8th decile 10 $996 7.41%
8th decile 10 $110 14.03%
9th decile 10 $2,128 15.84%
9th decile 10 $120 15.31%
10th decile 10 $7,132 53.08%
10th decile 10 $120 15.31%

'

References

  1. Dikhanov, Yuri, 2005. Trends in Global Income Distribution, 1970-2000, and Scenarios for 2015. United Nations Human Development Report, Occasional Paper. http://hdr.undp.org/en/media/globalincometrends.pdf
  2. Decile ratios of gross earnings. OECD Stat Extracts. Table in Labor/Earnings http://stats.oecd.org/Index.aspx?DataSetCode=DEC_I

See also

Further reading



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