Quintiles

Definition

Quintiles are a statistical measure used to divide a distribution of values into five equal parts. They are commonly used to analyze and compare income distribution and inequality within a population.

5 Must Know Facts For Your Next Test

1. Quintiles divide the income distribution into five equal groups, each representing 20% of the population.
2. The first quintile represents the lowest 20% of incomes, while the fifth quintile represents the highest 20% of incomes.
3. Comparing the share of total income held by the top and bottom quintiles is a common way to measure income inequality.
4. Quintiles can be used to analyze the distribution of other economic variables, such as wealth, consumption, or expenditures.
5. Changes in the relative shares of income held by different quintiles over time can provide insights into the dynamics of income inequality.

Review Questions

• Explain how quintiles are used to measure income inequality.
  • Quintiles divide the income distribution into five equal groups, each representing 20% of the population. By comparing the share of total income held by the top and bottom quintiles, researchers can assess the degree of income inequality within a society. A larger gap between the income shares of the highest and lowest quintiles indicates greater income inequality.
• Describe how changes in the relative shares of income held by different quintiles over time can provide insights into the dynamics of income inequality.
  • Analyzing how the income shares of different quintiles change over time can reveal important trends in the distribution of income. For example, if the income share of the top quintile increases while the share of the bottom quintile decreases, it would suggest that income inequality is rising. Conversely, if the income shares of the lower quintiles increase relative to the higher quintiles, it could indicate a reduction in income inequality.
• Evaluate the usefulness of quintiles in understanding the causes of income inequality.
  • Quintiles can provide valuable insights into the underlying causes of income inequality by revealing the specific segments of the population that are experiencing the most significant changes in their relative incomes. For instance, if the income share of the middle quintiles is declining while the top and bottom quintiles are gaining, it may suggest that technological change, globalization, or other factors are disproportionately benefiting high-skilled and low-skilled workers while negatively impacting the middle class. This type of analysis can inform policymakers and researchers as they seek to understand and address the complex drivers of income inequality.

Related terms

Income Distribution: The way a population's total income is dispersed or divided among individuals or households.

Income Inequality: The unequal distribution of income and wealth within a population.

Gini Coefficient: A statistical measure of income inequality that ranges from 0 (perfect equality) to 1 (perfect inequality).