In a new article for Social Europe, Jayati Ghosh critiques the World Bank’s metrics for inequality:
What makes this worse is that the metrics used to track progress on inequality are very inadequate. The World Bank is charged with monitoring this goal.
The bank does not rely on the widely recognised measures of inequality, such as the Gini coefficient (which encapsulates the dispersion of incomes across the entire distribution and ranges from 0 for total equality to 1 for infinite inequality) or the Palma ratio (the share of the top income decile divided by the income share accruing to the bottom 40 per cent).
Instead, it applies a notion of ‘shared prosperity’, expressed as the need to ‘progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average’. This is a bizarre idea of inequality: it leaves the rich out of the equation! And it provides very misleading estimates of the extent of inequality or progress in reducing it.
