Global inequality - Measuring economic inequality
4 important questions on Global inequality - Measuring economic inequality
How does GNI differ from GDP?
Comparing countries on the basis of income alone (using GNI) may mislead.
Why is this the case?
- Non-cash transactions are not included in GNI, even though this is still widely used, especially in low-income countries.
- GNI doesn't take into account what things cost, i.e., how much you can actually buy with a gross national income in that country.
- They don't tell much about the quality of life.
GNI does not take into account how much things actually cost in a country. Which tool does actually take this into account?
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Fertility rates tend to be higher in low-income countries than elsewhere. Can you explain this?
- Large families have a bigger economic benefit in lower-income countries, because they provide additional labour or otherwise contribute to family income.
- In wealthy industrial societies, children are more likely to be in school than working, which annuls the economic benefit.
The question on the page originate from the summary of the following study material:
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