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Measuring income inequality as a ratio

Typically, the most affluent earn 13 times more than the least affluent

U.S. Census data in FRED has helped us examine income inequality before, including mean and median income and the Gini ratio. Here, we examine income inequality through a different lens.

The GeoFRED map above shows the level of income inequality across U.S. counties. This particular measure is the ratio of average (mean) income for the highest earners (top 20%) divided by the average income of the lowest earners (bottom 20%) for each county. The Census data track the average income over a five-year period, in this case 2014 to 2019, to account for the fact that people’s income changes from year to year.

Measured this way, income inequality can be as high as 90 or as low as 5. That means that the most-affluent households in a particular county can earn as much as 90 times or as little as 5 times what the least-affluent households do. But those are the two extremes of income inequality. The typical (median) value is 13 times.

Because income levels vary widely across counties, two counties with similar degrees of income inequality can have very different economic profiles. For example, both Bath County, KY, and Ocean County, NJ, have a typical income inequality ratio, but the percentage of persons below the poverty line is 2.4 times higher in the Kentuckian county than in the New Jerseyan county.

How this map was created: The original post referenced an interactive map from our now discontinued GeoFRED site. The revised post provides a replacement map from FRED’s new mapping tool. To create FRED maps, go to the data series page in question and look for the green “VIEW MAP” button at the top right of the graph. See this post for instructions to edit a FRED map. Only series with a green map button can be mapped.

Suggested by Diego Mendez-Carbajo.

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