Inequality and the Tails: the Palma Proposition and Ratio

Abstract

The Palma Proposition is that changes in income or consumption inequality are (almost) exclusively due to changes in the share of the richest 10 per cent and poorest 40 per cent because the ‘middle’ group between the richest and poorest tend to capture approximately 50 per cent of gross national income (GNI). The Palma Ratio is a measure of income or consumption concentration based on the above‐mentioned proposition and calculated as the GNI capture of the richest 10 per cent divided by that of the poorest 40 per cent. In this paper we revisit the empirical basis of the Palma Proposition (the relative stability of the ‘middle’) with a new and expanded data set across and within developing and developed countries. We find the data reaffirms the Palma Proposition and that the proposition is getting stronger over time.

On the Biomedical Elite: Inequality and Stasis in Scientific Knowledge Production

“…We can then ask: (1) how egalitarian the distribution of NIH funding is, both at the level of individual investigators as well as the level of institutes where these investigators work, and (2) how funding levels relate, quantitatively, to the web of metrics for evaluation, ranking, and prestige that are prevalent in the biomedical world. We address these questions by drawing on tools from the economics of inequality that are commonly used to analyze income and wealth disparities (Atkinson, 1970;Sen, 1973;Piketty, 2014;Duménil and Lévy, 2011;Cobham et al, 2016).…”

“…While the Gini index continues to be popular in analyses of wealth and income inequality, several disadvantages of the index have been pointed out (Damgaard and Weiner, 2000;Piketty, 2014;Cobham et al, 2016), notably that the Gini is overly sensitive to changes in the middle range of the distribution but insufficiently sensitive to changes near its tails (Cobham et al, 2016). The Palma index of inequality (Cobham et al, 2016), which is simply the ratio of the share of income going to the top 10% to that of the bottom 40%, has been proposed as an alternative.…”

“…The Palma index of inequality (Cobham et al, 2016), which is simply the ratio of the share of income going to the top 10% to that of the bottom 40%, has been proposed as an alternative. We calculated the Palma index across PIs and organizations and found a similar pattern of rising inequality to that obtained with Gini ( Figure 2C and Figure 2D, respectively), where PIs in the top 10% had ⇠2-2.5 fold more funding than the bottom 40% in 1985-1995, but ⇠3-3.5 fold more funding by the 2000s.…”

Guest Editorial: Uncounted: Power, inequalities and the post-2015 data revolution

“…Cobham et al (2015a) lay out three main ways in which income inequality in particular is hidden. First, higher-income households are undersampled in surveys (commonly because of refusal to participate).…”

And yet it Moves: The Agenda against Inequalities in the G7 and G20

“…The concept of hidden inequality emerges from the economic theory on inequality (Cobham et al., , ; Schutz, ). This is the component of inequality which is not captured by current measures and datasets and it results in being the main driver of the multiplicity of messages on inequality trends and rankings.…”