One of the commonly used measures of social inequality is the Gini Coefficient. The Gini Coefficient ranges in value from zero to one. When it has a value of zero, a situation of perfect equality exists. When it has a value of one, it reflects a situation of perfect inequality. In other words, in a society with perfect equality (Gini Coefficient = zero) then all the wealth is divided equally among everyone. On the other hand, in a society with perfect inequality (Gini Coefficient = one) then only one person has all the wealth and everyone else has nothing.

Although many social scientists believe that social inequality is generally undesirable, one should use some care in using the measure. Some scientists believe that social equality may also be undesirable. Nevertheless, the Gini Coefficient is a useful tool to use to gauge the potential for problems that may arise from social inequality with international living. For potential retirees considering an overseas retirement, country comparisons of the Gini Coefficient can provide some insight into the political and social stability of those countries that you may be interested in.

To make the numbers easier to interpret, the Gini Coefficient has been multiplied by 100. Thus, zero represents a society with perfect equality and 100 represents a society with perfect inequality. The source of the data presented here is the United Nations 2009 Human Development Report. To help you in interpreting the data, some international comparison analysis is done for you. Just keep in mind that you should use these international comparisons only as a start in your investigation. Before taking the plunge into international living, it would be use to gather up as much information as you can about your potential retirement destination.

International Comparisons: Low Levels of Social Inequality (Gini Coefficient 10-29)

Countries with a Gini Coefficient that fall into this category of low social inequality (see table below) are developed European countries for the most part. This low Gini Coefficient value suggests a lower likelihood of domestic tension from social inequality. When making international comparisons with the Gini Coefficient, we are primarily looking at a measure of social inequality.

Of course, other factors may be relevant to your retirement decision such as the cost of living and this category has many high cost developed countries that may not be suitable for a modest retirement budget.

International Comparisons: Moderate Levels of Social Inequality (Gini Coefficient 30-39)

Countries with a Gini Coefficient that fall into this category of moderate social inequality (see table below) also include a mix of developed and developing countries. Theoretically, these countries with a moderate Gini Coefficient should be slightly more likely to experience internal problems caused by social inequality than those listed in the first table.

While this may be generally true for the developed countries, developing countries may face internal problems caused by other factors – such as ethnic separatism – so social inequality is not a perfect measure of social stability. Using these international comparisons (if social equality is a major factor to you), the countries listed below all possess a moderate level of social inequality and may be desirable countries for international retirement living.

International Comparisons: High Levels of Social Inequality (Gini Coefficient 40-49)

Countries with Gini Coefficients that fall into this category (see table below) consist of developing countries and a developed country with moderate to high levels of social inequality. These developing countries include countries from Latin America, Africa, and Asia. Interestingly enough, the one developed country that falls into this category is the United States. Although the United States has a moderately high Gini Coefficient, some social scientists would argue that the Gini Coefficient only measures cash income while some countries like the United States provides a considerable amount of social welfare that is non-monetary in nature. As a result, the Gini Coefficient for the United States is probably lower than what is shown.

Nevertheless, there still is probably more social inequality in this country than what the average person might assume. The United States is an interesting example. Although America may have high social inequality and crime rates, many Americans have found relatively peaceful places to live within the USA. This again, points out the fact that measures such as the Gini Coefficient is an ‘average’ used for international comparisons – and may not describe every location within a particular country with respect to the quality of life. In any country, there are likely to be significant internal variations due to differences between rural and urban areas, and between high and low income areas.

International Comparisons: Very High Levels of Social Inequality (Gini Coefficient above 50)

Countries with a relatively high Gini Coefficient in the table below are all developing countries with a sharp gap between the rich and the poor. Social inequality is at a very high level. For the most part, these countries are either in Latin America or Africa. Some social scientists believe that this is partly due to the colonial political systems that once dominated these countries that created very rigid social classes. For example, many of these countries have land ownership systems that evolved under a Spanish colonial influence which created and perpetuated a small wealthy landed class.

For international comparison purposes, there does appear to be higher levels of crime or instability in these countries with a high Gini Coefficient. One should keep in mind however, that the Gini Coefficient represents an average for an entire country. It is almost always the case that within a particular country there will be variations in Gini Coefficient values from one location to another. International comparisons of these countries against the rest world might suggest that these countries may not the most ideal for a peaceful and trouble free retirement due to the high degree of social inequality that exists. On the other hand, one might also conclude the opposite – that in these developing countries – pockets of development are beginning to emerge that may be suitable areas for a retirement abroad.

International Comparisons of Social Inequality: Summary

The Gini Coefficient is a useful measure of social inequality. It is not a perfect measurement and overstates the level of inequality for countries that provide non-monetary forms of social welfare to its citizens (e.g. the United States). As an indicator of social inequality, it does suggest the potential for social and political tensions that arise from differences in wealth between the rich and poor for any given country. The United States has a moderately high Gini Coefficient, which might be an indicator of the types of social problems that the United States has historically experienced as a result of social inequality.

There are developing countries that are viable international living destinations if you should choose to retire abroad that have levels of social inequality that are comparable to the USA or lower. For example, one could retire to a country with a good police force/army capable of managing social tensions. Alternately, one could decide to live in a large urban center where levels of security tend to be high.

(Photo by: Jon Rawlinson)

References and Bibliography

Countries With the Biggest Gaps Between Rich and Poor, Business Week

Gini Coefficient of Inequality, StatsDirect

Poverty Analysis, Measuring Inequality, World Bank

Social Inequality and Exclusion, Sociology Guide