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

                                                                                                                              Table 2

                                                                                                                        Income by Decile

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

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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

• Inequality
• Inequality income distribution in Mexico 2000-2008

Further reading

• Dr. Daniel P. O'Connor's class "Measurement in Health and Exercise Science has a section about percentiles and deciles