Gini coefficient

21 conclusions on inequality from new report

The NZ Initiative has published a report on inequality. They make 21 conclusions:

  1. Increased housing costs are hitting those on low incomes hardest, and to a very severe degree. (Figure 28.) Getting more houses built is a critical issue, regardless of economic inequality.
  2. There is substantial material hardship in New Zealand households.? Specifically, around 4% of the population are ?doing without? to a severe degree and 11% to a less severe degree.? For children the proportions are higher, at 8% and 18% respectively. ?For the elderly they are lower, at 1% and 3% respectively. The overall proportions are similar to an average for a group of EU countries. (Table 5 of the Poorly Understood report.)
  3. It is wrong and potentially counter-productive to conflate relatively low incomes with poverty or hardship.? Claims that quarter of a million of children or more (25%+) are living in poverty because they are in relatively low income households are gross exaggerations.
  4. Economic inequality rose markedly from the mid-1980s to the mid-1990s on all three of the main measures: pre-tax market income, disposable income and consumer spending. The share of the top 1% rose sharply in particular. Changes in household structure, socio-demographic attributes, employment outcomes and economic returns could account for perhaps 50% of the rise in disposable income inequality during this period.
  5. Current income is a poor indicator of hardship. Specifically, only around 40-50% of those experiencing relatively low current incomes are also experiencing hardship, and some on higher incomes are experiencing hardship.One reason is that low income is a temporary situation for a considerable proportion of households, another is that the elderly can be asset rich but income poor. But a real difficulty is that unanchored relative income measures don?t tell us anything about actual living standards, eg poverty. Our Poorly Understood report shows that current welfare benefits are much higher, inflation adjusted, than what was deemed to be an adequate wage for a labourer to earn in order to be able to support a dependent spouse and three children back in 1936. The Ministry of Social Development?s authoritative annual statistical reviews of well-being and inequality show that real income growth has markedly reduced the proportion of households falling below an earlier real income threshold.
  6. Consumer spending is a better indicator of living standards. ?More recent Motu research?has found that it is also a much better indicator of self-assessed wellbeing. ?? Read more »

Alarming rise in reporting about inequality, it’s a hockey stick I tell you

Peter Cresswell blogs at Not PC.

Firstly a bit of history and some facts. Inequality is not rising.

The last few years have shown a sharp rise in the number of newspaper articles devoted to inequality. ? Inequality is clearly seen as a serious and rising problem.The only problem with that is that the data says otherwise.

Yeah…not rising.

Work by both the Ministry for Social Development and Treasury shows that while inequality rose through the reforms of the late 80s and early 90s, it since plateaued or even dropped. The Ministry of Social Development concluded that there has been no rise or fall in income inequality in the last twenty years across a range of measures.

Treasury work by Christopher Ball and John Creedy found, in addition to a mild decline in Gini measures of income inequality since 2001, there has been substantial reduction in consumption inequality. Inequality in consumption has, since 2010, been rising mildly, but is currently below 1984?s level.

What is rising though is the media pimping the poor to set a narrative:

Yet as inequality has either flattened or declined, media conversations about rising inequality has exploded ? as the graph below comparing media mentions with the actual data. Clearly, their campaigning against rising inequality may be motivated by many things, but one of them is not the evidence ?

image_thumb[2] Read more »

Are the left lying to us about inequality?

The left-wing parties claim that New Zealand is becoming less equal, that inequality is rising and that nasty Mr John Key, when he isn’t snacking on babies, is plotting with banksters to make things worse.

It is plausible to desperately stupid people but the reality is far from that:

New Zealand needs to “change its tune” on inequality, think tank The New Zealand institute says.

The group, which is supported by many leading business people, made the call following the publication of a Treasury paper which found inequality in this country has, with some variability, largely remained constant for the past 20 years.

The Treasury paper follows close on the heels of an ?OECD report which found income inequality in New Zealand was above average for the group, which includes many of the world’s most advanced economies.

Last December the OECD also said the Gini co-efficient – a broad measure of inequality – rose faster in New Zealand than in many other OECD countries between 1985 and 2011. Growing inequality meant New Zealand’s economy had only grown by 28 per cent between 1990 and 2010, rather than the 44 per cent growth it should have had.

The new Treasury report acknowledged inequality in this country did rise from the late 1980s to the early 1990s. But it said that since then inequality had – with some variability – remained either constant or had fallen slightly.

Read more »

Oh no, another of Labour’s mantras of misery destroyed

Labour continues to run a mantra of misery about New Zealand, despite their claims of a positive campaign.

I think they think that if they say it enough it will become a truism rather than the Nasty party reputation they have built.

Unfortunately for them their campaign is built upon problems that are slowly coming right as the economy grows and their mantra of misery is becoming tiresome in teh face of facts.

One?area that they have harped on about, inequality is also coming right according to latest reports.

Child poverty has dropped back almost to pre-recession levels, as New Zealanders’ jobs and incomes finally climb out of a five-year downturn.

The Ministry of Social Development’s latest annual report on household incomes says the number of children in households earning below 60 per cent of the median wage fell by 25,000 to 260,000 last year, the lowest number since 2007 when there were 240,000 children in poverty. ? Read more »