Towards a more inclusive economy: measuring and understanding inequality

Addressing inequality is a key policy objective within the global Sustainable Development Goals (SDGs) and the European Union’s Pillar of Social Rights. A growing body of research sheds light on the different dimensions of inequality, from income and wealth to gender, education, environment and health.  

More comprehensive global data sets on income and wealth inequality, supported by fiscal data, reveal a global trend of increasing economic inequality – see Figure 1. In 2016, the richest 1% of Europeans earned 13% of the national income - this compares to 19% of the national income earned by the entire bottom 50% of the population. Elsewhere in the world extremes of wealth and poverty are even more extreme.

New tools and data are also helping to shape debates on other forms of inequity, including the gender pay gap and carbon inequality. In Europe, men earn on average 16.2% more than their female counterparts and globally the richest 10% are responsible for nearly half of the total lifestyle linked emissions.

Income inequality graph

For the July Beyond GDP newsletter, IEEP’s Natural Resources and Circular Economy Programme explored the different forms of inequality, with a focus on inequality metrics, as well as the relationship with the Beyond GDP debate and environmental degradation. While a number of statistical tools are already being used across the world, measuring inequality is not without challenges, particularly due to its multidimensionality. For the purpose of the Newsletter, the IEEP’s team interviewed two international experts.

The economist Lucas Chancel, co-director of the World Inequality Lab and lead coordinator of the World Inequality Report 2018, explains his work on the measurement of economic inequality and its interactions with sustainable development. His interview provides a valuable insight in the different dimensions of inequality, the development of the World Inequality Report and the short-comings of GDP.

Ricardo Fuentes-Nieva, an economist, chief executive officer of Oxfam Mexico and key architect of Oxfam’s Even it Up campaign, highlights the important changes in the way inequality is understood in the past decades, and providing insights on policy measures to reduce inequalities within nations.

Read the full interviews here.

Follow the link to subscribe to the Beyond GDP newsletter which explores the different forms of measuring and assessing inequality, as well as recent news on Beyond GDP indicators, and an agenda of forthcoming events.

For more information on IEEP’s work on indicators please contact Jean-Pierre Schweitzer and Susanna Gionfra.