Saturday, December 1, 2007

The Inequity of Inequality

Inequality is always a sensitive subject. It defines the political spectrum (the further left you go the more important equality as a policy objective becomes, and vice versa as you go rightward). For many of course it is also a moral issue: especially in the context of global extremes of wealth and poverty.

Often it is difficult to get good, reliable information on equality in Ireland, but like the long awaited bus that arrives in a convoy of three, we find ourselves in receipt of three reports this week that touch on the topic of inequality. Two are from the CSO: Equality in Ireland and the EU Survey on Income and Living Conditions; and a third is from Forfás: the Annual Competitiveness Report.

To take the Forfás report first, though not ostensibly about inequality it contains a chart (Figure 2.07 on page 27 of the pdf) which purports to show that the level of income inequality deteriorated between 2000 and 2005. The measure used is that of the Gini Coefficient, illustrated in the diagram here. In a world of perfect income equality the distribution of income (on the vertical axis) by population (on the horizontal axis) would match perfectly - giving a straight 45 degree line. In the real world that just isn't the case, and you get a curved line as in the graph. The bigger the gap between the ideal straight line and the curved line (shaded blue in the diagram) then the more unequal is the income distribution in the population being measured. The Gini Coefficient is the ratio of the shaded blue area to the total area formed by the triangle in the diagram.

A Measurement Problem

Does it matter that income inequality has apparently worsened in Ireland since 2000? Firstly, we don't know if it has actually worsened as the Gini Coefficient is just a statistical device subject to some severe drawbacks. As Wikipedia notes in a thorough analysis of this approach to the measurement of inequality:
  • As with other inequality coefficients, the Gini coefficient is influenced by the granularity of the measurements. For example, five 20% quantiles (low granularity) will usually yield a lower Gini coefficient than twenty 5% quantiles (high granularity) taken from the same distribution. This is an often encountered problem with measurements.

  • The measure will give different results when applied to individuals instead of households. When different populations are not measured with consistent definitions, comparison is not meaningful.
  • As for all statistics, there may be systematic and random errors in the data. The meaning of the Gini coefficient decreases as the data become less accurate. Also, countries may collect data differently, making it difficult to compare statistics between countries.

  • Care should be taken in using the Gini coefficient as a measure of egalitarianism, as it is properly a measure of income dispersion. Two equally egalitarian countries with different immigration policies may have different Gini coefficients.
So the Forfás data on a deteriorating gini coefficient tells us nothing about the trend in inequality per se (and possibly more about the impact of immigration over the same period).

What About Poverty?

For most people, a concern about income inequality is essentially a concern about poverty and a worry that a 'rising tide' simply doesn't raise all boats. Which brings us to the CSO's report on Income and Living Conditions in Ireland. You probably saw the headlines during the week:

"Number of people in poverty in Ireland falls sharply since 2003"

No - you didn't see the headline? Don't worry, nor did I. In fact, the CSO report shows that the percentage of the population at risk of poverty (using a relative measure of 60% of equivalised total disposable income) has fallen from 19.7% in 2003 to 17% (of a larger population on much higher incomes) in 2006. A cause for celebration you might have thought - but for the most part the story (where it was covered at all by the print media) has been confined to a minor story in the home news section. Somehow I don't imagine the story would have gotten the same treatment if the CSO had reported a sharp increase in poverty since 2003, but that's just me letting my inner cynic have his say ...

The point, however, is that despite a rise in the Gini Coefficient measure of income inequality, other, more direct measures of poverty show a marked improvement in the wellbeing of those on lower incomes relative to the total population. Inequality and poverty are totally separate issues in Ireland, and whatever about political perceptions of inequality the really good news is that fewer and fewer of our fellow citizens are experiencing economic deprivation.

A Smorgasbord of Inequality

Which brings us to the most entertaining of the three reports referencing inequality in the past week: the CSO's Equality in Ireland 2007 report. Though the poverty lobby may become a victim of its own success as poverty declines in Ireland; the 'indignation lobby' have lots of other things to fret and fuss about. The Equality in Ireland report treats us to an assessment of the current state of the nation in relation to 'Nine Equality Grounds' namely:
  1. Gender
  2. Marital Status
  3. Family Status
  4. Sexual Orientation
  5. Religion
  6. Age
  7. Disability
  8. Nationality & Ethnicity
  9. Traveller Community
The report contains some 'shocking' statistics including the following:
  • 'Married' is the most common marital status at 46.4% of all aged 15 and over.
  • 98% of all 18-64 year olds are heterosexual.
  • 86.8% of adults aged 15 and over are Catholics.
  • 90.7% of adults aged 15 and over do not have any disability.
  • 88.8% of people in Ireland are Irish nationals - and 87.3% of them are white.
  • 99.5% of people in Ireland are not travellers.
Of course, these are not the statistics that the report focuses on: but that's just me having fun with statistics. However the really important number is: what proportion of people actually experience discrimination across any of the 'Equality Grounds'? The grand total is just 12.5% (see figure 1.11 on page 13 of the report). That's right, despite all the opportunities to 'experience discrimination' if you are single, female, gay, elderly, disabled, a traveller, a non-Catholic, non-Irish or non-White, just one person in eight has 'experienced discrimination in the past two years'.

Though as a white, Irish, middle-aged male (in reasonably good health) I do find myself feeling a little aggrieved at all the attention (and taxpayers money) so many folk are getting. Now I wonder if that is grounds for discrimination proceedings ... ?

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