One way to measure income inequity, or how far from equal the household incomes are in a state or nation, is the Gini Coefficient. In this measurement (here calculated by the U.S. Census), a score of 0 would represent absolute equality; every household brought in the same amount of money.

A score of 1 would mean that one household alone brought in all the money, while every other household brought home nothing.

Chart of income inequality in U.S.

Perhaps surprisingly, given the belief by many that we have moved toward a socialist state, the U.S. is well to the unequal end of the spectrum compared to other countries. There is also a subtle difference between states. I was surprised, for example, to see a couple of the more "liberal" states, Connecticut and New York, are among the most unequal, while three more "conservative" states, Utah, Wyoming and Alaska, are the most equal.

Why does this matter? Some economists believe that countries that have high inequality of household income spend an inordinate amount of money on "guard labor" just to safeguard the property of the 'haves." Perhaps it's no coincidence that the U.S. has a far higher rate of imprisoned people per capita than any other country in the world.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

Add a Comment

*0 / 3000 Character Maximum