The Miser Index

Photo: Colourbox.

A person that accumulates huge fortunes, but lives miserably, is a miser. A society where the rich accumulate huge fortunes and let the poor live miserably, is equally a miserly society. The Miser Index, developed by Kalle Moene and Jo Thori Lind at the University of Oslo, is a measure of how miserly a country is. In the map below, you can explore the most recent development in the Miser Index around the world.

Explore the Miser Index

 

What is the Miser Index?

The Miser Index is a measurement of how miserly a country is. The basic idea is that a country must be considered more miserly if it is very rich and has large differences in the standard of living between the rich and the poor at the same time. This will be reflected in a higher Miser Index. For the mathematically inclined, the Miser Index is defined as

 

 

Where h is the share of the population below the poverty line,  is the mean income among the non-poor and is the mean income among the poor. For most of the calculations of the Miser Index, the poverty line of 2 PPP (purchasing power parity) dollars a day has been used.

The Miser Index can be interpreted as the total income gap needed to make sure that all the poor would have an income just above the poverty line.

The Data Material used to calculate the Miser Index is from the World Development Indicators.

Is the world getting more miserly?

Looking at income distributions between countries in the world over time, we can calculate the worldwide Miser Index, as can be seen in the panel below. In sum, the world has become approximately 50% more miserly from 1975 to 2005.

This graph shows the Miser Index in the world from 1975 to 2005. The blue line shows the Miser Index, the green line shows the total income per capita and the red shows the poverty share. At the same time as income has increased, the world has become more miserly.

What does it take to abolish poverty?

Poverty and inequality are key research topics at ESOP, and what it takes to abolish poverty is definitely hard to answer. Using the Miser Index, one can nonetheless get a grip of what it would take to bring a country's poor out of poverty.

We can use the theoretical tax rate for this. The theoretical tax rate is the rate of tax that must be charged on the incomes of the non-poor to raise enough revenue to bring all the poor out of poverty. This theoretical tax rate does not take into account deadweight losses that would usually make such a simple redistribution impossible. However, the rate still gives a rough overview of what it will take to combat poverty. In the map above, you can explore the theoretical tax rates.

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