“The truth is that the United States today has more income and wealth inequality than any other major industrialized nation on Earth.”
— Sen. Bernie Sanders (I-Vt.), town hall event in South Carolina, Aug. 21, 2015
“We live in a nation which has more income and more wealth inequality than any other major country.”
— Sanders, rally in Phoenix, July 18, 2015
The gap between the rich and poor is a cornerstone of Sanders’s platform in his campaign for the Democratic presidential nomination. This particular talking point is one he uses often on the trail, highlighting the income and wealth inequality in the United States.
FactCheck.org found exaggerations in his claim three months ago, yet Sanders continues to repeat it in his speeches. How does income and wealth inequality in the United States compare to other “major” countries?
The most commonly used measure of income inequality is the Gini index, which scores countries between zero (everyone earns the exact same amount) and one (one person earns all the income).
Sanders compares the U.S. to other industrialized countries, so we used data from the Organization for Economic Co-operation and Development, which measures income distribution and poverty among industrialized nations. We looked at data for 2012, the most recent year where most of the countries’ Gini index was available.
The U.S. does rank among the top countries with the greatest income inequality, but it does not rank No. 1. Out of 32 member countries, the U.S. Gini index ranked in eighth place in market income before taxes and transfers, and third in disposable income after taxes and transfers. (There technically are four countries ahead of the U.S., but three of those countries had two scores per year because of changes in income definitions in 2011-12.)
Check out the data for yourself here:
The Sanders campaign cited a different fact check that confirmed his statement using the pre-tax gross income, which showed U.S. had the highest Gini coefficient.
But this is not a standard measure of income inequality. Rather, it is a breakdown in the OECD dataset used to measure mandatory employee benefits in some countries. Six of the 32 member countries in the OECD income inequality data set do not have data for this measure. OECD says market income and disposable income are the two most important concepts of income that are used to compute its Gini coefficients and other income-poverty measures.
Another measure is the Palma ratio, which is defined as the ratio of the top 10 percent of the population’s share of income to the bottom 40 percent’s share. Using this measure, the U.S. Palma ratio stacks up to the disposable income Gini index, and it ranks third behind Mexico and Turkey (the same two countries the U.S. ranked behind in the disposable income Gini index).
Wealth inequality is more difficult to measure across countries, and is more difficult to quantify than income.
The Sanders campaign referred us to the OECD’s wealth database using 2010 data. It showed the top 10 percent of earners held 76 percent of the wealth in the U.S.; the top five percent held 63 percent of the wealth; and top one percent held 36.6 percent. In all three measures, the U.S. ranked the highest among the 13 member nations that OECD recorded in the dataset.
Experts pointed us to the Global Wealth Databook published by the Credit Suisse Research as a reliable comparison of wealth inequality. According to that report, which breaks down the wealth share of the top decile and top percentile by country from 2000-14, the U.S. ranked seventh out of 46 countries for the greatest concentration of wealth at the top decile. Among OECD countries on this list, the U.S. ranked second. The U.S. ranks lower when looking at the wealth concentration in the top one percent. The U.S. ranked 16th out of 46 countries, and fourth among OECD countries.
Sanders does not clarify what he means by “major” country. The Global Wealth Databook includes developed and emerging economies, but one could argue many of the emerging economies in the databook could be considered “major” or industrialized economies, such as South Korea, Turkey, Mexico, India, China and Czech Republic.
“There are all sorts of ways to measure inequality. And in most ways, the U.S. comes out on top, and that’s fair to say,” said Pew Research Center’s Drew DeSilver, who has studied and written about global comparisons of inequality. But the U.S. does not always rank No. 1, he added.
The Pinocchio Test
The U.S. does rank high among OECD member countries in income and wealth inequality. But Sanders exaggerates when he says that the U.S. ranks No. 1 in both measures. For income inequality, the specific measure that his campaign cited is a specific Gini index measurement that the OECD uses to compare mandatory employee benefits. For that measure, the U.S. does rank No. 1. But that is misleading.
For the two other, standard measures of income inequality, the U.S. ranks fifth before taxes and transfers, and third in disposable income after taxes and transfers. As for wealth inequality, the U.S. still does rank among the top. But again, not all measures of wealth inequality confirm his point.