12.4 Income inequality: measurement and causes  (Page 12/20)

A useful first step is to rank the households by income, from lowest to highest. Then, since there are 10 households total, the bottom quintile will be the bottom two households, the second quintile will be the third and fourth households, and so on up to the top quintile. The quintiles and percentage of total income for the data provided are shown in the following table. Comparing this distribution to the U.S. income distribution for 2005, the top quintile in the example has a smaller share of total income than in the U.S. distribution and the bottom quintile has a larger share. This pattern usually means that the income distribution in the example is more equal than the U.S. distribution. Income Quintile % of Total Income $10,000 Total first quintile income: $22,000 6.0% $12,000 $16,000 Total second quintile income: $34,000 9.2% $18,000 $24,000 Total third quintile income: $48,000 13.0% $24,000 $36,000 Total fourth quintile income: $86,000 23.2% $50,000 $80,000 Total top quintile income: $180,000 48.6% $100,000 $370,000 Total Income