You would certainly have come across articles or presentations where it is stated that South Africa is the most economically unequal society in the world. Invariably, reliance for such statements is placed on the so-called Gini coefficient or index, produced by none other than the World Bank.
Ever tried to dig a little deeper?
The Gini index attempts to measure income inequality. Briefly put, it can range from 0 to 100, where 0 reflects an equal distribution of income (where everyone has the same income) and 100 reflects absolute inequality (where one person has all the income and no-one else has anything).[1]
The World Bank Gini table shows a range from a low of about 25 (reflected in some European countries) to a high of that accorded to South Africa, which has a score of 63.
There are surprisingly many. Here are the most basic ones:
Before transfers to households |
After transfers to households |
|
Before income tax and other deductions at source |
1 |
2 |
After income tax and other deductions at source |
3 |
4 |
Moreover, income reported by households may not always correspond with the survey design.
In spite of the limitations set out above, it is surprising that ostensibly knowledgeable commentators and presenters make a habit of glibly stating that the World Bank’s Gini index shows South Africa to be the most unequal society in the world.[2] Even the World Bank itself is guilty of this.[3] No-one will deny that South Africa is a very unequal society, but relying on comparative calculations which have such obvious glaring gaps, does these commentators no favours.
Instead, one cannot avoid the impression that none of them have bothered to check what they are relying on and that we are dealing with the well-known phenomenon that something is regarded as true if it is repeated often enough by a sufficient number of important sounding people or organisations.
A little more care would be welcome. And if, for example, the various statements included the simple qualifications that the Gini index neither includes all the world’s countries, nor is completely comparable across all countries, nor constitutes all information about inequality, no-one would be able to quibble.
Anton van Dalsen
Legal Counsellor
anton@hsf.org.za
Charles Simkins
Head of Research
charles@hsf.org.za
[1] For the mathematically gifted, see the technical explanation in Inequality Measurement, Development Issues no. 2, October 2015, published by the Development Strategy and Policy Analysis Unit in the UN’s Department of Economic and Social Affairs: https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/dsp_policy_02.pdf
[2] Surprisingly little has been published on the limitations of the index. However, see Income inequality and limitations of the Gini index: the case of South Africa, HSRC Review, November 2014.
[3]Overcoming Poverty and Inequality in South Africa, 2018, published by the World Bank, states on page xv that “… the country (ie. South Africa) had a Gini coefficient of 0.63 in 2015, the highest in the world…”.