Tuesday, June 06, 2017

Our own worst enemy

 In Indonesia, according to Oxfam’s latest reportfour men are estimated to be worth the same amount as the poorest 100 million people, and the richest 1% now owns half the country’s wealth

Nine in every 10 adults there believe they are located around the middle of the country’s income distribution – which means rich and poor alike tend to think they experience the “average” standard of living.

On average, Indonesians believed the country’s Gini coefficient of income inequality to be around 0.3, which is more equal than most countries in the world. In reality, Indonesia is about as unequal as the United States, with a Gini coefficient of around 0.4 – higher than most countries.
Furthermore, when asked what they would prefer inequality to be, respondents’ answers implied an average “ideal Gini coefficient” of 0.15 – lower than any country has ever achieved. 
Poorer people who overestimate their place in the distribution are likely to be missing out on social protection programs where people need to self-identify as poor to benefit. This appears to be an issue in the United States as well as Indonesia, where only 35% of eligible elderly people identify as poor and sign up to receive food stamps.
Almost half of respondents thought people were poor due to “internal” reasons such as being lazy, and believed that rich people gained their wealth through hard work. In fact, it is likely that the most important drivers of one’s living standard are determined at birth. This is the case globally, where around 80% of an individual’s income level is determined by their country of birth and the income of their parents.