Clutching at straws

So what exactly is the Gini Coefficient (aka Gini Index)?The Gini coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation’s residents, and is the most commonly used measure of inequality. It was developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper “Variability and Mutability”A wealthy country and a poor country can have the same Gini coefficient, even if the wealthy country has a relatively equal distribution of affluent residents and the poor country has a relatively equal distribution of cash-strapped residents.

So where is the flaw in using the Gini coefficient in relation to Ireland’s income distribution?

The Gini index is only as accurate as the gross domestic product (GDP) and income data that a country produces. Many developing nations do not produce accurate or trusted economic data, so the index becomes more of an estimate. There is also a generally negative correlation between Gini coefficients and per-capita GDP, because poorer nations tend to have higher index figures.

Ireland’s GDP figures are notoriously suspect as is illustrated in the following blog from Financial Times Data –

“The OECD observer pointed out that Ireland GDP per head might not accurately reflects Ireland’s actual wealth”

When one puts the difference between our GDP figures versus GNP figures in context with the other countries Joanna uses in her example, it is blatantly obvious that something is amiss with our GDP figure.A Gini level of 29.9 is very slightly below the EU average, but if, as the data above shows, our GDP figure in real terms is closer to the EU average, then the true factual Gini level is far higher and places us firmly among the most unequal countries in the world.It is disingenuous to rely on the TASC report as a measure of Labour’s success regarding inequality in Ireland.