Friday, May 15, 2009

As you can see, there does appear to be a moderate correlation between these two measures

TO BE NOTED:


May 14, 2009, 8:06 pm

Reader Feedback: Social Spending and Inequality

Last week, we ran a couple of posts about some interesting trends in the Organization for Economic Cooperation and Development’s latest “Society at a Glance Report.” In response, a reader who goes by Pzaud wrote:

What would be even more interesting would be to graph inequality of wealth against social spending. According to the OECD, we have the fourth highest inequality, and the fourth lowest social spending. Coincidence?

So, per Pzaud’s suggestion, here’s a graph showing the relationship between these two variables. Click on the image below to see a larger version.

[via Apture]

Here’s how to read this chart. The horizontal axis shows public social spending as a percent of net national income. The vertical axis shows the Gini coefficient, which is a measure of income inequality. A low Gini coefficient means a country has more equal income distribution, while a high Gini coefficient shows more unequal distribution.

As you can see, there does appear to be a moderate correlation between these two measures.

For all 30 O.E.C.D. member countries, public social spending accounts for an average of 24.4 percent of net national income, and the average Gini coefficient is .311. The same respective numbers for the United States are 18.1 percent and .391.

And another noteworthy trend: Across the O.E.C.D., the percent of N.N.I. used for public social spending has generally been growing since the 1980s. This is true for the United States (the green line closer to the bottom), too.

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