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Here’s a letter to the Washington Post:
Kelly Breazeale argues that income inequality is at worrying levels because the Gini ratio – a popular measure of income inequality – is today higher than it has ever been for American households since the Census bureau began calculating it in 1967 (Letters [2], June 4). True, but misleading.
Although the Gini ratio for households is indeed today at an all-time high, the Gini ratio for individuals has remained flat since 1960. This reality means that, because income inequality among persons hasn’t risen in more than a half-century, the rise in inequality among households over that time is caused by changes in the composition of households.
Specifically what’s happened is that, starting around 1970, the percentage of single-person households (especially those of women over the age of 65) has increased. Because single-person households (especially those of women over retirement age) generally earn less income than do multiple-person households, household inequality has risen even though the inequality that surely matters most (if inequality matters at all) – inequality among flesh-and-blood individuals – has remained unchanged.*
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030* See especially the fourth figure here [3]. (I thank my friend Jon Murphy for these data).