Final answer:
One common way of measuring income inequality is to divide households into five equally-sized groups, known as quintiles, based on their income. This allows for comparing the distribution of income among the quintiles.
Step-by-step explanation:
One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then to divide all households into five groups with equal numbers of people, known as quintiles. This calculation allows for measuring the distribution of income among the five groups compared to the total.
The first quintile is the lowest fifth or 20%, the second quintile is the next lowest, and so on. We can measure income inequality by comparing what share of the total income each quintile earns.