How Can a Country Measure Its Income

Inequality?
Different methods can be utilized to rate income inequality. However, the most commonly
used measurements are a measurement by quintile, using household income, and the Gini
index (Amadeo, 2018). In the first case, the U.S. Census Bureau divides the population into
fifths (quintile) and compares household incomes of each group (Amadeo, 2018). The first
quintile, or 20% of all households, will have the lowest income, the second quintile will have
the next bottommost, and so on. This measurement allows for measuring income inequality,
comparing what amount of the total earnings each group receives.

Thus, in 2019, the bottom quintile “only earned 3.1% of the nation’s income,” with an
average income of $15,286 (Amadeo, 2018, para. 11). At the same time, the group with the
highest income earned “51.9% of all U.S. income,” with an average income of $254,449
(Amadeo, 2018, para. 10). One can see that the inequality gap between the bottom and the top
quintiles is huge, and this difference should not be ignored.

Another way to quantify income differentiation is the Gini index. This method summarizes
the dispersion of income from zero to one, where zero is an equal distribution, and one
denotes that only one person has all the money (Amadeo, 2018). The U.S. Census Bureau
indicates that the Gini index was 0.484 in 2019, comparing to 0.386 in 1968 (as cited by
Amadeo, 2018). This measurement demonstrates that the income differentiation in America is
widening, and the authorities have to take some steps to diminish this inequality gap.