Gini index is a poor inequality measure | Letter

Graham Sowter takes issue with a recent letter by Tim Worstall of the Adam Smith Institute that cited data suggesting that income inequality has decreased slightly in the UK in the last decade

There are lies, damned lies and Gini index statistics. A single statistical measure invented in 1912 cannot hope to capture the nature of inequality in an entire country in 2019. Tim Worstall of the Adam Smith Institute (Letters, 2 October) is careful to refer to income inequality, as do the Tory politicians who often make the same claim, but accumulated wealth is now a very important component of inequality: 10% of the population own over 45% of total wealth.

There are separate Gini indices for property wealth, financial wealth and private pension wealth, also published by the Office for National Statistics, that all have much higher values than the index for income. Effective disposable incomes are also crucial; if you are spending 30%-50% of your post-tax income on rent, you are not as rich as the Gini index says you are. Rents now represent a significant transfer of money from the poor to the rich.

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