At the TCS blog, Tim Worstall attacked a chart comparing global levels of income inequity, originally published by the Economic Policy Institute. His post is here. Tim claimed that this chart proved precisely the opposite of what the EPI intended it to show, that is, that the chart showed that "the poor in America have exactly the same standard of living as the poor in Finland (and Sweden)", two countries which he derided as "redistributionist paradises". From this, Tim concluded that the U.S. is doing enough for the poor.
Stephen C., who sent in this chart, was very confused by the length of the bars: left of the divider, the larger the income index, the shorter the bar; right of the divider, the larger the income index, the longer the bar.
For the EPI, this is a case of arming the competition. Echoing Robert's comment from yesterday, this is one chart that opines but should have murmurred.
The chart is a very convoluted way to study the idea of income inequality. The first bar states that the 90th percentile income in Finland is 1.11 times the median U.S. income, after adjusting for PPP. Notice the simultaneous change in percentile and country, which complicates our understanding of the difference.
The median income is perhaps the simplest (not most informative) measure of income equality. In the EPI chart, the edges of each bar describe the 10th and 90th percentile income in a country. We only know 80% of the population lie within each bar but nothing about how they are distributed.
In the revised chart, I plotted another popular measure of income equality, the ratio of 90th percentile to 10th percentile (since the data is readily available from the EPI chart). It's clear that inequality is highest in the English-speaking Western world where the top earners get 4-6 times more than the bottom earners.
This income ratio is computed for each country, and can be used to compare across countries without resorting to another index.
Reference: "America: More Like Sweden Than You Think", TCS Daily, Aug 26 2006.