Setting the Context
Not too long ago Craig Simmons, a lecturer in Economics at the Bermuda College, was featured in an RG article discussing inequality in Bermuda (and was clearly doing so after reading Thomas Picketty’s masterpiece on the subject).
In response to the warnings being raised by Mr Simmons, the Finance Minister Bob Richards essentially dismissed Mr Simmons thoughtful comments by saying there’s no statistics to back up Mr Simmons argument.
Which isn’t to say that Mr Simmons is wrong (and unless we’re invoking Bermudian exceptionalism, I’d imagine Mr Simmons is more right than wrong, seeing as the points he’s raised have been found globally), it’s just to say that the Government isn’t actively collecting or making available the statistics we’d need to ‘prove’ his points.
Not too long after this, Mr Wayne Furbert (PLP MP) proposed a Quality of Life study, which was rather crudely dismissed by the OBA Chair, Ms Susan Jackson, MP.
Both of these incidents got me thinking about what stats do we have which may illustrate inequality in Bermuda.
Both the 1991 and the 2000 census attempted to measure, to a degree, rates of inequality, and the Low Income Thresholds Study, is also informative on this (see Statistics for more information on these).
However, the matter of inequality seems absent from the 2010 census, and the Low Income Thresholds Study – despite a stated commitment to update it regularly – has not been updated since its 2007 publication.
So, I thought I’d try my hand at a first look at matters of inequality in Bermuda.
I’m not a statistician, and I only have limited time and resources (including limited access to data), so I’m only going to say that my findings are, at best, indicative of inequality in Bermuda.
Furthermore, they only speak to income inequality, not total wealth, which would include accumulated savings, inheritances, various assets (property, stocks, etc).
I’m pretty sure that if all those were included to make a more refined model, the inequalities in Bermuda would be much more unequal than the income inequalities alone suggest.
So, what did I do?
I decided that the data regarding income in the 2010 census was the best place to start.
This provides data on total income distribution, and then income distribution broken down according to race and sex.
I’ve decided here to focus on race rather than sex, although I think that’s important too.
The data shows population distribution according to 16 income bands, ranging from ‘$36,000 and below’ to ‘$750,000 and over’.
I’ve worked out:
- The percentages of population distributions across these bands.
- Plotted these according to a line graph.
- Plotted both total racial population distribution and compared it to total racial income distribution.
- Worked out a proxy of total income wealth distribution per income band (by adopting the mean for each income band multiplied by numbers of people in each band, adopting $36k and $750k for the first and last bands – which I imagine under-represents total wealth).
- Condensed the 16 income bands into 10 in order to approach a decile breakdown of income distribution (combining income bands 2 and 3 into a single decile, and income bands 12 to 16 into a single decile).
- Created a Palma Index for Bermuda’s income distribution, for Total population, Blacks, Whites, Mixed and Not Stated racial categories.
I decided to use a Palma measure of inequality simply because it was easier to do than other measures of inequality such as the Gini Coefficient or the Theil Index, and this article indicated it was actually a potentially better index than the others.
It essentially looks at the very rich and the very poor as an indication of inequality, largely ignoring the ‘middle’.
The Palma Index itself is determined by dividing the total wealth of the richest decile by the total wealth of the four poorest deciles.
A Short Discursive
Basically, the data reflects what many of us have known for a while…
- The working class is overwhelmingly Black, the upper class is overwhelmingly White.
- The majority of income wealth in Bermuda is commanded by a minority of the population.
- We live in an unequal society, and, based solely on income distributions, a more unequal society than, say, the USA or the UK.
- Income inequality is more pronounced within the White population (in that there are greater extremes of wealth inequalities there – there are a lot of VERY rich Whites, the bulk of Whites are ‘middle class’ but there’s also a number of very poor ‘small’ Whites) than in the Black population (Which has a minority of VERY rich Blacks, and the rest are almost evenly split between the lower and middle classes).
Once again, these results are only indicative of inequalities in Bermuda and only speak to income inequality.
Personally, my feeling is that if one were to include a wider metric, covering all facets of wealth, our inequality levels would be much greater than that reflected in income distribution alone.
It would be interesting to situate these figures historically too, to see if the income inequalities have changed over time, and under different governments, or if they’ve essentially stayed the same. Perhaps someone could explore that angle in the future.
I’ll just put forward the hypothesis (and thus the challenge!) that under the PLP (so between the 2000 and 2010 censuses) inequality would have marginally decreased, and that Blacks increased their numbers in the upper income bands.
And now, the tables and graphs!
I worked these out on Excel, and I welcome people to go through my sums and check to make sure I’ve done it right. It’ll take too much time to explain exactly what I did and why, but I hope it’s mostly self-explanatory. I’ll try to answer any questions in the comments section, and look forward for any schoolboy errors being pointed out…
The Excel spreadsheet opens by clicking the below link:
Figure One shows the racial compositions (in percentages) of each income band (disregarding the ‘Not Stated’ category). Whites make up about 30% of the lower class and the lower and mid middle class. Blacks make up around 60% of these classes. As one gets into the upper middle class (which arguably is ‘lower upper class really, based on the income band!) this begins to switch, with Whites increasing the composition and Blacks decreasing, with the income band of $235k-349k being roughly equal in racial composition. Blacks then make up around 30% of the upper class, with Whites making up just over 60%. Mixed/Other seem to be mostly steady at all income bands, at around 10%.
Figure Two shows the racial composition of income wealth according to racial group. Blacks actually command the majority of income wealth (at 47%), but this is lower than what would be expected if income wealth was equally distributed according to total population size of each racial group. Blacks make up 51% of the population in question, but only command 47% of the income. Whites only make 32.4% of the population, but command 41% of the income. Mixed/Other seem more equal, being 11.7% of the population, and commanding 11% of all income. Not Stated make up only 0.72% of the population, but command 1% of all income. In other words, Whites command 1.27 times their ‘fair’ share of income wealth, and Not Stated command 1.4 times their ‘fair’ share. Blacks command only 0.9 times their fair share, Mixed/Other 0.94 their fair share.
Figure Three shows the population breakdown of each decile of income band (I use the term ‘decile’ loosely here). If each decile commanded their fair share of income wealth, the income distribution should mirror this. It doesn’t.
Figure Four shows the total income slices for each of those same deciles as in Figure Three. The richest deciles (nine and ten) alone command 60% of all income wealth in Bermuda, while only making up 30% of the population. Decile ten alone, at 14% of the population, command 38% of all income wealth. Or to flip it around, 70% of the population only commands 40% of all income wealth. And if one looks at just deciles one to six, which represent 50% of the population, they only command 22% of all income wealth. It’s not quite the 99% versus the 1%, at least in terms of income distribution, but it certainly is inequality.
Figure Five shows the total income wealth according to the Palma format, showing the income distribution between the poorest four deciles, the middle five deciles and the top tenth decile. According to the Palma equation, where one divides the wealth of the top tenth decile to the wealth of the lowest four deciles, Bermuda has a Palma Index, for income distribution, of 2.65.
Figure Six shows the income distribution within the Black population, along the same Palma format as in Figure Five. The Black population has a Palma Index of 1.56.
Figure Seven shows the income distribution within the White population, as above. The White population has a Palma Index of 5.68.
Figure Eight shows the income distribution within the Mixed/Other population; they have a Palma Index of 2.
Figure Nine shows the income distribution within the Not Stated population; they have a Palma Index of 2.25.
Figure Ten shows Bermuda’s Palma Index in reference to other countries (strictly these are not comparable, as I’ve only measured income, not total wealth; I include it here solely as an indication of our minimum inequality in comparison with other countries). Based on this, we’re a more unequal country than the USA and the UK, as well as Malaysia, Venezuela, China, Morocco, Russia, Tanzania, Albania, India, Bangladesh, Egypt and Denmark. Jamaica is the most unequal country, followed by South Africa.
I have a gut feeling that a truer metric of our inequalities (including those beyond income) would see Bermuda place somewhere in between South Africa and Brazil. I leave that as a hypothesis and a challenge for others.