This document discusses economic inequality and related concepts. It compares income and consumption inequality between individuals and across countries. It introduces the Lorenz curve and Gini coefficient as tools to measure inequality, with the Gini ranging from 0 representing perfect equality to 1 representing perfect inequality. It also references theories about the relationship between economic growth and inequality over time according to Simon Kuznets and W. Arthur Lewis.

2. Economic
Development
Lecture 11
Inequality

3. Questions?

4. Income
Consumption
Per Capita
Per Household
Inequality

5. $ Income
Consumption
More difference in Income
than Consumption

6. Per
Capita
Per
Household
Bob $75,000 $75,000
Bill $60,000 $100,000
Ann $40,000 married
Average $58,333 $87,500

7. Quintiles - 20%
0
15
30
45
60
Bottom 20% Second 20% Third 20% Fourth 20% Top 20%
Bangladesh Mexico U.S.

8. Lorenz Curve
Cumulative
% of
consumption
Cumulative % of people
0%
100%
50%
25%
75%
0% 50% 100%25% 75%
45 degree
line
perfect
equality

9. Geni Coefficient
Cumulative
% of
consumption
Cumulative % of people
45 degree
line
perfect
equality
0%
100%
50%
25%
75%
0% 50% 100%25% 75%
A
B
A
A + B
0 = perfect
equality
1 = perfect
inequality
.25
to
.65

10. Can you have growth
without increasing
inequality?
Growth vs. Inequality

11. $
Rich
Poor
Rich
Poor
Simon
Kuznets
W. Arthur
Lewis

12. Ginis don’t seem to
change much
Evidence

15. Inequality is not the
same thing as
poverty

17. 1981: 44%
2015: 9.6%
Drop of 78% in 34 years