Measuring Income Inequality
3. Measuring Income Distribution by Quintiles
One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then to divide all households into five groups with equal numbers of people, known as quintiles. This calculation allows for measuring the distribution of income among the five groups compared to the total. The first quintile is the lowest fifth or 20%, the second quintile is the next lowest, and so on. We can measure income inequality by comparing what share of the total income each quintile earns.
U.S. income distribution by quintile appears in Table 1. In 2016, for example, the bottom quintile of the income distribution received 3.1% of income; the second quintile received 8.3%; the third quintile, 14.2%; the fourth quintile, 22.9%; and the top quintile, 51.5%. The final column of Figure 1 shows what share of income went to households in the top 5% of the income distribution: 22.6% in 2016. Over time, from the late 1960s to the early 1980s, the top fifth of the income distribution typically received between about 43% to 44% of all income. The share of income that the top fifth received then begins to rise. Census Bureau researchers trace, much of this increase in the share of income going to the top fifth to an increase in the share of income going to the top 5%. The quintile measure shows how income inequality has increased in recent decades.
| Table 1. Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households, All Races: 1967 to 2016 (Source: U.S. Census Bureau, Table H-2) | ||||||
| Year | Shares of aggregate income | |||||
| Lowest fifth |
Second fifth |
Third fifth |
Fourth fifth |
Highest fifth |
Top 5 percent |
|
| 1967 | 4.0 | 10.8 | 17.3 | 24.2 | 43.6 | 17.2 |
| 1970 | 4.1 | 10.8 | 17.4 | 24.5 | 43.3 | 16.6 |
| 1975 | 4.3 | 10.4 | 17.0 | 24.7 | 43.6 | 16.5 |
| 1980 | 4.2 | 10.2 | 16.8 | 24.7 | 44.1 | 16.5 |
| 1985 | 3.9 | 9.8 | 16.2 | 24.4 | 45.6 | 17.6 |
| 1990 | 3.8 | 9.6 | 15.9 | 24.0 | 46.6 | 18.5 |
| 1995 | 3.7 | 9.1 | 15.2 | 23.3 | 48.7 | 21.0 |
| 2000 | 3.6 | 8.9 | 14.8 | 23.0 | 49.8 | 22.1 |
| 2005 | 3.4 | 8.6 | 14.6 | 23.0 | 50.4 | 22.2 |
| 2010 | 3.3 | 8.5 | 14.6 | 23.4 | 50.3 | 21.3 |
| 2015 | 3.1 | 8.2 | 14.3 | 23.2 | 51.1 | 22.1 |
| 2016 | 3.1 | 8.3 | 14.2 | 22.9 | 51.5 | 22.6 |
It can also be useful to divide the income distribution in ways other than quintiles; for example, into tenths or even into percentiles (that is, hundredths). A more detailed breakdown can provide additional insights. For example, the last column of Table 1 shows the income received by the top 5% percent of the income distribution. Between 1980 and 2016, the share of income going to the top 5% increased by 6.1 percentage points (from 16.5% in 1980 to 22.6% in 2016). From 1980 to 2016 the share of income going to the top quintile increased by 7.5 percentage points (from 44.1% in 1980 to 51.5% in 2016). Thus, the top 20% of householders (the fifth quintile) received over half (51.5%) of all the income in the United States in 2016.