<< Chapter < Page Chapter >> Page >

U.S. income distribution by quintile appears in [link] . In 2011, for example, the bottom quintile of the income distribution received 3.2% of income; the second quintile received 8.4%; the third quintile, 14.3%; the fourth quintile, 23.0%; and the top quintile, 51.14%. The final column of [link] shows what share of income went to households in the top 5% of the income distribution: 22.3% in 2011. Over time, from the late 1960s to the early 1980s, the top fifth of the income distribution typically received between about 43% to 44% of all income. The share of income that the top fifth received then begins to rise. According to the Census Bureau, much of this increase in the share of income going to the top fifth can be traced to an increase in the share of income going to the top 5%. The quintile measure shows how income inequality has increased in recent decades.

(Source: U.S. Census Bureau, Table 2)
Share of aggregate income received by each fifth and top 5% of households, 1967–2013
Year Lowest Quintile Second Quintile Third Quintile Fourth Quintile Highest Quintile Top 5%
1967 4.0 10.8 17.3 24.2 43.6 17.2
1970 4.1 10.8 17.4 24.5 43.3 16.6
1975 4.3 10.4 17.0 24.7 43.6 16.5
1980 4.2 10.2 16.8 24.7 44.1 16.5
1985 3.9 9.8 16.2 24.4 45.6 17.6
1990 3.8 9.6 15.9 24.0 46.6 18.5
1995 3.7 9.1 15.2 23.3 48.7 21.0
2000 3.6 8.9 14.8 23.0 49.8 22.1
2005 3.4 8.6 14.6 23.0 50.4 22.2
2010 3.3 8.5 14.6 23.4 50.3 21.3
2013 3.2 8.4 14.4 23.0 51 22.2

It can also be useful to divide the income distribution in ways other than quintiles; for example, into tenths or even into percentiles (that is, hundredths). A more detailed breakdown can provide additional insights. For example, the last column of [link] shows the income received by the top 5% percent of the income distribution. Between 1980 and 2013, the share of income going to the top 5% increased by 5.7 percentage points (from 16.5% in 1980 to 22.2% in 2013). From 1980 to 2013 the share of income going to the top quintile increased by 7.0 percentage points (from 44.1% in 1980 to 51% in 2013). Thus, the top 20% of householders (the fifth quintile) received over half (51%) of all the income in the United States in 2013.

Lorenz curve

The data on income inequality can be presented in various ways. For example, you could draw a bar graph that showed the share of income going to each fifth of the income distribution. [link] presents an alternative way of showing inequality data in what is called a Lorenz curve    . The Lorenz curve shows the cumulative share of population on the horizontal axis and the cumulative percentage of total income received on the vertical axis.

The lorenz curve

The graph shows an upward sloping dashed plum line labeled Perfect equality extending from the origin to the point (100, 100%). Beneath the dashed line are two upward sloping curves. The one closest to the dashed line is labeled 1980, and the line further from the dashed line is labeled 2011.
A Lorenz curve graphs the cumulative shares of income received by everyone up to a certain quintile. The income distribution in 1980 was closer to the perfect equality line than the income distribution in 2011—that is, the U.S. income distribution became more unequal over time.

Every Lorenz curve diagram begins with a line sloping up at a 45-degree angle, shown as a dashed line in [link] . The points along this line show what perfect equality of the income distribution looks like. It would mean, for example, that the bottom 20% of the income distribution receives 20% of the total income, the bottom 40% gets 40% of total income, and so on. The other lines reflect actual U.S. data on inequality for 1980 and 2011.

Questions & Answers

what is meant by efficiency of labour
Fritz Reply
production possibility curve
Mama Reply
graphs about production possibility curve?
what are the concept of economic
dauda Reply
demand suply and population
graphs on about ppc
with the aid of diagrams illustrate movement along and shifts in demand curve
Mercy Reply
what is scarcity
ISAH Reply
limited in supply relative to demand
scarcity means resources available to provide our daily needs are limited
shortage of resources that we need for our demand. basically price go up due to this problem.
scarcity means our resources r not enough for us or our resources r limited
discuss the effects of price controls int the economy
• It stimulates excess demand, which cannot be statified ie shortage in the market. • It encourages hoarding of commodities by wholesales and retailers. • It leads to the creation of " black market" or undercounter sales and its attendant high prices. • It encourage conditional sales of products.
on how scarcity,choice and opportunity cost work together
means less than requirement
What are the reasons for the existence of monopoly?
Gerry Reply
Because such barriers occur in different forms, there are therefore varying reasons for the existence of monopolies. Ownership of a Key Resource: When one company exerts sole control over a resource that is necessary for the production of a specific product, the market may become a monopoly.
Thanks Kenneth
what is international trade
Syed Reply
what is imperfect compition
what is crowding out effect
what is federal finance?
what is populic
what is imperfect compition
Explain five importance of the study of economic
Francis Reply
study of economics help a person to make rational choice in multiple wants. help individual to be a well all-round thinker.
the five important of the study of economics are as follows (1)time (2)management of resources (3)choice making (4)business(5)scarcity
an increase in demand (while supply remains constant) what will happen to deh graph?
Thabiso Reply
what is going to happen to the graph if there is an increase in demand, While supply remains constant .
What will happen to the graph if there is an increase in demand While supply remains constant?
price will increase high than automatically demand will decrease
equilibrium ?
is when the supply and demand are balanced
as demand increase and supply remain constant means the price will increase also
what is the difference between economic growth and economic development ?
What is black money
what is demand
Sarkwah Reply
demand is the willingness to buy a commodity backed by the ability to pay.
demand is mere desire on commodity with ability to back up with purchasing power
demand is the want of commodity back by the ability to pay for that commodity
demand is the willingness to buy any type of commodity for the exchange of something that is valuable to the seller.
demand is any valuable commodity that people are willing to buy at prices.
Equilibrium is when there's an equality between quantity demanded and quantity supplied
Victory Reply
Again the consumer will be in equilibrium if the price of the commodity is equal to Marginal utility of that product
wat is the law of supply
Agnes Reply
It's what* -The law of supply states that price and supply is relative. As all factors are equal, if price increases then quantity of supply there for increases.
the law of suppy state that when prise is high, more commodity with be supply and when p is low less of the same commodity will be supply.
It states that, "other things being equal, move supplied at a higher price than at a lower price ".
it's state that the increased in prices will lead to decreased in supply
what is the theory of supply and the determinants of demand
And please what is change in quantity supplied?
guys why are you so quiet
A woman has a television set which cost her $800 two years ago. A new set would cost her $1000 and she could sell her television set for $450. What is the opportunity Cost of keeping the old TV?
Murewah Reply
Maybe the opportunity cost of the TV is 800

Get the best Principles of economics course in your pocket!

Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Principles of economics' conversation and receive update notifications?