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Ranking U.S. Income Inequality

Which pair of countries is most similar to the United States in terms of income inequality?

December 31, 2012

Which pair of countries is most similar to the United States in terms of income inequality?

Income inequality is measured on the basis of the so-called Gini value. On this zero-to-100 scale, a lower value indicates a more equal distribution of income. The United States has had a Gini value of around 43 for the past ten years or more.

We wonder: Which of these country pairings is most similar to the United States in terms of income inequality?

[toggle title_open=”A. United Kingdom and Australia is not correct.” title_closed=”A. United Kingdom and Australia”]

The United Kingdom, together with Portugal, has among the highest levels of income inequality in the European Union. However, with a Gini value of 35, even the famously unequal United Kingdom has less income inequality than the United States.

Even more surprising is the case of Australia. The country has long been considered very similar to the United States — with its dislike of taxes and environmental protection and its image of rugged individualism. However, on the crucial income front, it is even more egalitarian than the UK.[/toggle]

[toggle title_open=”B. Germany and France is not correct.” title_closed=”B. Germany and France”]

Both Germany and France have a far more equal income distribution than the United States, with Gini values of just over 30. This is a level of income equality that the United States has never before experienced.

Of course, the United States is a larger and much more diverse country than either Germany or France. Still, the gap seems large when one considers that the three countries share the same level of development and have similar education levels, political systems and even demographic structures.[/toggle]

[toggle title_open=”C. China and Thailand is not correct.” title_closed=”C. China and Thailand”]

China and Thailand are both more unequal than the United States. However, with Gini values of around 45 points, only two points above the U.S. value, it’s practically a statistical dead heat.

In China, which started its successful transition to capitalism with about half the level of inequality it currently has, the march toward income inequality has been especially striking.

While the country’s inequality is largely a consequence of rapid growth, too much inequality, as witnessed today, may well begin to hinder future growth and make the country politically unstable.[/toggle]

[toggle title_open=”D. Iran and Venezuela is correct.” title_closed=”D. Iran and Venezuela”]

Both Iran and Venezuela, two countries with whom the United States has very tense relations, have levels of income inequality that are almost the same as the United States, according to Branko Milanovic, author of "The Haves and the Have-Nots."

It is an odd situation for the United States to be in: to be among the most unequal of the advanced economies — and to be so uncomfortably close to two of its chief foreign-policy irritants.

And lest we forget, how about America’s long-time nemesis, Russia? Despite the glitz and glamour of the Moscow billionaires, the country has a slightly lower level of income inequality than the United States.[/toggle]

Editor’s note: To listen to The Globalist’s Stephan Richter discuss this quiz with Marketplace Morning Report host Jeremey Hobson, click here to open a pop-up media player.