The US is a big outlier when it comes to income inequality

It’s no secret that the US has an inequality problem.

But it is striking to see it compared with other developed economies.

In a recent note to clients, Goldman Sachs’ Sumana Manohar and Hugo Scott-Gall shared a chart comparing a given country’s gross domestic product per capita to its Gini coefficient.

The Gini coefficient is a measurement of the income distribution within a country that aims to show the gap between the rich and the poor. The number ranges from zero to one, with zero representing perfect equality and one representing perfect inequality. So a higher Gini coefficient means greater inequality.

In the chart below, developed-market economies such as those in Germany, France, and Sweden tend to have a higher GDP per capita and lower Gini coefficients. On the flip side, emerging-market economies in countries like Russia, Brazil, and South Africa tend to have a lower GDP per capita but a higher Gini coefficient.the-us-is-a-big-outlier-when-it-comes-to-income-inequality

The US, however, is a big outlier. Its GDP per capita is on par with developed Northern European countries like Switzerland and Norway, but its Gini coefficient is in the same tier as Russia’s and China’s.

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