Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000,
$22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000,
$96,000, $54,000, $110,000, $80,000. The share of income received by the highest quintile of this income distribution is _______, which is than that for the highest quintile of the U.S. income distribution in 2005.

Question

Quizplus · Accepted Answer

The highest quintile of the income distribution is the top 20% of earners. To find the share of income received by the highest quintile, we need to first sort the data points in ascending order:$8,000, $14,000, $22,000, $26,000, $38,000, $46,000, $52,000, $54,000, $62,000, $80,000, $92,000, $96,000, $110,000, $118,000, $132,000The top 20% of earners are the top 3 earners, who have incomes of $118,000, $132,000, and $110,000. The total income of these three earners is $360,000. The total income of all 15 earners is $980,000. Therefore, the share of income received by the highest quintile is $360,000 / $980,000 = 37.9%.The share of income received by the highest quintile of the U.S. income distribution in 2005 was 49.4%. Therefore, the share of income received by the highest quintile of Paddy's cousins' income distribution is lower than that for the highest quintile of the U.S. income distribution in 2005.

Paddy Has Lots of Cousins