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LAKSHYA INTERNATIONAL JOURNAL OF RESEARCH IN MANAGEMENT STUDIES
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]
May 2016, Volume 1, Issue 2
ISSN: 2456-2823
“Income Inequality and Human Well Being”
Abhishek Sharma1
1
Assistant Professor, Poddar International College, Jaipur
Introduction:
Economic inequality is the difference of economic conditions between people or countries. Also called income
inequality, it has three dimensions: wealth, income, and consumption. There are various methods of measuring
inequality such as Gini coefficient, Theil index, Hoover index, Palma ratio etc. Well Being refers to social,
economic, psychological, or health state of an individual or a group. There ar many internationally accepted
quantitative criteria which can help to assess the overall well being of individual/society such as Human
Development Index, World Happiness Report, Physical Quality of Life Index, Happy Planet Index, Gross
national happiness, Social Progress Index, Canadian Index of Wellbeing etc. These methods/indices use
commonly used human development and quality of life factors such as employment rate, life expectancy,
inflation rate, health & safety etc to assess the composite well being of society.
Objective:
The author seeks to investigate the relationship between the various factors which affect the well being and Gini
Coefficient - a measure of statistical income distribution of a country. It is the author’s hypothesis that large
income disparity causes social tensions and problems. This in turn leads to problems at the individual level, thus
affecting the factors which contribute to the quality of life and well being. Thus the author expects that large Gini
Coefficient i.e. higher income disparity will correlate positively with ‘negative’ factors such as crime rate,
unemployment rate, while correlating negatively with ‘beneficial’ factors such as life expectancy, GDP per
capita etc.
A unit of KAKKAR FOUNDATION (Trust) – Empowering Youth Through Education.
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]
LAKSHYA INTERNATIONAL JOURNAL OF RESEARCH IN MANAGEMENT STUDIES
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]
ISSN: 2456-2823
May 2016, Volume 1, Issue 2
Methodology:
The study uses secondary data in the form of data provided by United Nations Reports, Human Development
Report by UNDP, CIA World Factbook, World Bank Reports and Luxembourg Income Study. Six factors which
can be deemed to affect the well being and quality of life individually and socially were taken viz. Where to be
Born Index, Unemployment Rate, Life Expectancy, GDP(PPP) per Capita, Inflation Rate, UN World Happiness
Report rank and Homicide Rate. Each of these factors was correlated with Gini Coefficient. 75 countries were
chosen randomly for which the mentioned data was available.
Findings:
GINI
GINI
WTBBI
Unemployme
nt Rate (%)
Life
Expectancy
GDP(PPP)
per Capita
Inflation
Rate
UN WHR
Homicide
Rate
WTBB
I
Unemployme
nt Rate (%)
Life
GDP(PP
Inflatio
Expectanc P)
per
n Rate
y
Capita
1
0.23579
1
0.10978
5
-0.2707
1
0.29249
0.82075
5
-0.22339
1
0.29846
0.88494
6
-0.28938
0.707088
1
0.12689
0.15412
0.14897
0.79191
2
0.084467
-0.07953
-0.13974
-0.44122
0.608243
0.69784
1
0.08892
0.54080
6
0.27694
0.064439
-0.31691
-0.32859
0.57808
UN
WHR
Homicid
e Rate
1
0.0469
6
1
A unit of KAKKAR FOUNDATION (Trust) – Empowering Youth Through Education.
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]
LAKSHYA INTERNATIONAL JOURNAL OF RESEARCH IN MANAGEMENT STUDIES
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]
May 2016, Volume 1, Issue 2
ISSN: 2456-2823
The findings show that Where to be Born Index, Life Expectancy, GDP(PPP) per Capita and UN World
Happiness Report rank correlate negatively with Gini Index. Conversely Unemployment Rate (%), Inflation Rate
and Homicide Rate correlate positively with Gini Index.
Hypothesis:
The hypothesis is that income inequality is either a cause or one of the economic indicators of socio-economic
problems. Whether it is a cause or not, cannot be determined by this study alone, however it seems to be strongly
associated with these indicators.
Conclusions:
Reducing income inequality should be the one of the goals of policy makers and stakeholders in order to
improve socio-economic conditions.
References:
1. The
World
Factbook
https://www.cia.gov/library/publications/resources/the-worldfactbook/docs/notesanddefs.html?fieldkey=2116&term=Economy%20-%20overview
2. UN Human Development Report http://hdr.undp.org/en
3. Inequality and Unsustainable Growth: Two Sides of the Same Coin? Ostry , Jonathan David; Berg,
Andrew, 2011 http://www.imf.org/external/pubs/cat/longres.aspx?sk=24686
4. More
evidence
on
Income
Distribution
and
Growth
Clarke,
George,
https://www.researchgate.net/profile/George_Clarke2/publication/4827793_More_Evidence_on_Income
_Distribution_and_Growth'/links/0deec52b2071e31b08000000.pdf
A unit of KAKKAR FOUNDATION (Trust) – Empowering Youth Through Education.
12, Shivam Nagar 1st, Jagatpura, Jaipur – 302017. Rajasthan. e-mail: [email protected]