The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)

-Why does the census data overstate inequality?

Question

The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)
 
-Why does the census data overstate inequality?

Quizplus · Accepted Answer

The census data does not consider the in-kind transfers received by the people from the government, which leads to an overestimation of inequality. In-kind transfers refer to the provision of goods and services by the government, such as subsidized housing or healthcare, instead of cash payments. This is an important factor to consider when measuring income inequality because in-kind transfers can significantly reduce poverty and inequality by providing access to essential goods and services. Therefore, the exclusion of in-kind transfers from the census data can potentially overstate the degree of income inequality in a society.

The Figure Given Below Shows the Lorenz Curves of Two