Question

suppose you have annual total income data for a country, with the population divided into quintiles by money income.why is this data measure not a good reflection of the degree of income inequality in a country? check all that apply.

Answer 1

Measuring income inequality by dividing the population into quintiles is not a good reflection of the degree of income inequality in a country due to oversimplification, exclusion of top earners, and lack of detail about the middle class.

Step-by-step explanation:

Measuring income inequality by dividing the population into quintiles is not a good reflection of the degree of income inequality in a country for several reasons:

1. It oversimplifies income distribution: Dividing the population into five equal groups does not capture the full complexity of income distribution. It fails to consider the concentration of income within each quintile.
2. It ignores the top earners: Quintiles focus only on the distribution among the bottom 80% of the population, neglecting the income inequality among the top 20%.
3. It lacks information on the middle class: Quintiles do not provide detailed information about income distribution within the middle class, which is an important indicator of economic well-being.