Tuesday, 12 May 2015

The Gini Coefficient in Asia (Social Inequality in China, Laos, etc.)

Any article relating statistics that originate from the government of the People's Republic of China has to include some kind of caveat stating how dubious these statistics are.  A Bloomberg article reporting the Gini coefficient for China closes with a quotation from an economist calling the most recent figure "even wilder than a fantasy". (Click)

However, there have been some interesting changes in China since 2008 that would (or should?) nudge social inequality.  The country implemented its own nationwide (social) health-insurance plan, and, of course, there has been ongoing capital flight ("…since 2005, there has been a sharp acceleration of capital flight reaching an estimated $350 billion in 2012 alone", click).  When the elite evacuate and/or hide their wealth (through capital flight, etc.) that would show up in calculations as increasing social equality… of a very hollow sort.  The reduction of catastrophic health-care costs (for the rich and poor alike) through socialized health-insurance can meaningfully impact inequality, and quickly, too (this is a subject I researched in Cambodia; I haven't yet seen a single evaluation of China's current, nationwide health-insurance system, that started being rolled out in 2008).

There was some jiggery-pokery required to get a constant line out of scattershot data.  Compare the chart above to the data-table below.

Although the Gini Coefficient is (or was?) fashionable, it really doesn't tell us much when examined over time, nor even in comparing one society to another.  Is China more or less egalitarian than Thailand?  That's an interesting question, and we could pose more than one interesting answer, entailing various methodological approaches… but the Gini coefficient doesn't tell us all that much (not even about wealth, considered as something distinct from income).  Are the United States really more unequal than Thailand?  Maybe.  It depends on what you're measuring and how you measure it.

In terms of the dramatically lower figures for Denmark, even a cursory glance at the structure of university funding (and tuition costs) gives a more meaningful sense of how (and why) Denmark is more egalitarian than the U.S. or Thailand --i.e., even though the cost of tertiary education is merely one economic anecdote.

The distribution of land ownership is another "anecdote" that has profound social implications, and, in this, China is hardly comparable to any other country in the world.

Really, what we need is a fashionable statistic that's focused entirely on the poorest quintile of any given society, with a view to the full-life-cycle of cohorts born into relative poverty.  Although it may not be obvious from the snapshot of income taken in a single year, the upward mobility of the poor in the U.S.A. is exponentially greater than any of the other countries shown on this chart, and that, of course, is one reason why so many poor migrants are eager to move to the United States.