Long-term readers will know that I have my doubts about the value of the precise measurement of inequality known as the Gini coefficient. It’s one of the specific examples of my general cynicism about overly specific measurements. Things are usually a good deal more complicated.
Nonetheless it is fascinating to read John Burn-Murdoch’s piece for the Financial Times this weekend, Inequality hasn’t risen. Here’s why it feels like it has, which is grounded wholly in the Gini coefficient. Burn-Murdoch is the FT’s Mr Statistics, and he is always readable and interesting, so I’ll forgive the obsession with the use of single datapoints that will always be flawed if viewed in isolation (and I’ll acknowledge also that he recognises the limits of Gini: “Aggregate inequality statistics certainly have their place, but they can mask important nuances,” he writes).
The core of Burn-Murdoch’s article is the data shown in these charts:
He notes the increased attention to inequality over the past decade, even though the Gini numbers suggest it is in fact falling in both the UK and US, and he attributes this to a squeezing of the middle class between improved treatment of the poorest paid (which appears to be the driver of more than the total drop in the Gini measurement) and an increased stretching of the advantages of those best off in our society (which has increased inequality, but less than the reduction driven by the improvements for those least well off). While it’s known that the minimum wage in the UK and its bolstering over time has helped those least well off here, it is more surprising to find that some similar improvements have also been experienced by the poorest in the US also, despite the notorious stagnation of the national minimum wage there. This squeezing effect is reflected in the title given to the article in the paper copy of the newspaper: Why the middle class is right to feel squeezed.
This blog would naturally suggest that one reason why there is increased noise about inequality now, despite the falls in the Gini coefficient, is that the problem as humans see it is unfairness, not inequality, and the bluntness of Gini fails to capture the richness of human experience. In particular, it’s hard to believe that the improvement in the incomes of the poorest is genuinely felt to be an improvement in their life experience – perhaps especially as they have experienced greater inflation than wider society over recent times. The moves in Gini may be masking insight as much as they are revealing.
Burn-Murdoch is clearly right when he highlights the reductions in sense of opportunity available to many in society – opportunity both for themselves and for their children. But, for this blog at least, these are questions of fairness, not of inequality (measured by Gini or in some other way).
See also: Fairness – the human lens for addressing our current challenges
What gets measured gets managed – unfortunately
The centre cannot hold
Inflation’s two separate world’s (at least)
I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour.
Inequality hasn’t risen. Here’s why it feels like it has, John Burn-Murdoch, Financial Times, 4 January 2025
The Sense of Fairness blog 