Deciles

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Deciles

Deciles are a simple way to measure inequality.[1]  [2] This page describes deciles using an example of income inequality.

The main idea is that deciles show how income is distributed, how much of the total income in a country is earned by lower wage earning groups and how much of the total income is earned by higher wage earning income groups. If the people in the top and bottom groups earn the same proportion of the income, then there is income equality. If the top groups earns a much higher percent of the total income, while people in the bottom groups earn much lower percent of the total income, then there is inequality.

The tables below show how deciles are calculated.

In table 1, all of the people in two "countries", A and B are sorted and listed in the order of the amount of income they earn. In country A, person 1 earns $1, person 2 earns $1, and so on up to person 100, who earns $890.  In this country of 100 people, the first 10 people are the first 10% of the total population, or the first decile. These first 10 people earn a total of $18, which is 0.13% of the total income of the country. The next 10 people together earn $91, or 0.68% of the total income in that country. On the other hand, the first 10 people in country B, together, earn 1.28% of the country's income, a slightly higher percent, while the second 10 people together earn 3.83% of the total income of that country.

Table two just shows the deciles. As can be seen, the top 10 wage earners in country A, or the top decile, earn 53% of the country's income, while the top decile in country B earns 15% of the country's income. There is a very high degress of inequality in country A, since only 10% of the population, or a single decile, earns more than half of the income. There is some degree of inequality in country B, since the top decile earns more than does the bottom decile, but not as much inequality.

Tables

Table 1
Income by Individual

 

Distribution of income in county A                                                                Distribution of income in country B

Decile

'

Person

 

Income

 

Income of

Decile

Decile Income as

% of Total Income

 Decile

 

Person

 

Income

 

Income of

Decile

Decile Income as 

% of Total Income

 1$1   1$1  
 2$1   2$1  
 3$1   3$1  
 4$1   4$1  
 5$1   5$1  
 6$1   6$1  
 7$1   7$1  
 8$1   8$1  
 9$5   9$1  
1st decile10$5$180.13%1st decile10$1$101.28%
 11$5   11$1  
 12$6   12$1  
 13$7   13$3  
 14$8   14$3  
 15$8   15$3  
 16$9   16$3  
 17$11   17$4  
 18$12   18$4  
 19$12   19$4  
2nd decile20$13$910.68%2nd decile20$4$303.83%
 21$14   21$5  
 22$14   22$5  
 23$15   23$5  
 24$16   24$5  
 25$21   25$5  
 26$22   26$5  
 27$23   27$5  
 28$23   28$6  
 29$25   29$6  
3rd decile30$25$1981.47%3rd decile30$6$536.76%
 31$35   31$6  
 32$45   32$6  
 33$46   33$6  
 34$47   34$6  
 35$47   35$6  
 36$47   36$6  
 37$48   37$7  
 38$48   38$7  
 39$57   39$7  
4th decile40$58$4783.56%4th decile40$7$648.16%
 41$59   41$8  
 42$59   42$8  
 43$61   43$8  
 44$62   44$8  
 45$63   45$8  
 46$64   46$8  
 47$65   47$8  
 48$76   48$8  
 49$77   49$8  
5th decile50$78$6644.94%5th decile50$8$8010.20%
 51$78   51$8  
 52$79   52$8  
 53$79   53$8  
 54$82   54$9  
 55$82   55$9  
 56$83   56$9  
 57$85   57$9  
 58$86   58$9  
 59$86   59$9  
6th decile60$86$8266.15%6th decile60$9$8711.10%
 61$87   61$11  
 62$87   62$11  
 63$88   63$11  
 64$88   64$11  
 65$88   65$11  
 66$92   66$11  
 67$93   67$11  
 68$93   68$11  
 69$94   69$11  
7th decile70$95$9056.74%7th decile70$11$11014.03%
 71$96   71$11  
 72$96   72$11  
 73$97   73$11  
 74$97   74$11  
 75$97   75$11  
 76$98   76$11  
 77$98   77$11  
 78$98   78$11  
 79$99   79$11  
8th decile80$120$9967.41%8th decile80$11$11014.03%
 81$130   81$12  
 82$150   82$12  
 83$155   83$12  
 84$170   84$12  
 85$181   85$12  
 86$222   86$12  
 87$223   87$12  
 88$224   88$12  
 89$331   89$12  
9th decile90$342$2,12815.84%9th decile90$12$12015.31%
 91$532   91$12  
 92$555   92$12  
 93$567   93$12  
 94$678   94$12  
 95$688   95$12  
 96$777   96$12  
 97$778   97$12  
 98$779   98$12  
 99$888   99$12  
10th decile100$890$7,13253.08%10th decile100$12$12015.31%
 

 

 

Table 2

Income by Decile

Distribution of income in county A                                                                           Distribution of income in country B

Decile                    People in      

Decile

Income in       

the Decile

Decile Income as 

% of Total Income

           'Decile                People in      

Decile

Income in        

the Decile

Decile Income as 

% of Total Income

1st decile10$180.13% 1st decile10$101.28%
2nd decile10$910.68% 2nd decile10$303.83%
3rd decile10$1981.47% 3rd decile10$536.76%
4th decile10$4783.56% 4th decile10$648.16%
5th decile10$6644.94% 5th decile10$8010.20%
6th decile10$8266.15% 6th decile10$8711.10%
7th decile10$9056.74% 7th decile10$11014.03%
8th decile10$9967.41% 8th decile10$11014.03%
9th decile10$2,12815.84% 9th decile10$12015.31%
10th decile10$7,13253.08% 10th decile10$12015.31%
 

'

 

References

  1. Dikhanov, Yuri, 2005. Trends in Global Income Distribution, 1970-2000, and Scenarios for 2015. United Nations Human Development Report, Occasional Paper. http://hdr.undp.org/en/media/globalincometrends.pdf
  2. Decile ratios of gross earnings. OECD Stat Extracts. Table in Labor/Earnings http://stats.oecd.org/Index.aspx?DataSetCode=DEC_I

See also

Further reading