What does a Palma ratio of 2 mean?

A Palma ratio of 2 means the richest 10% earn twice as much as the poorest 40% combined. Values above 2 indicate high inequality; Nordic countries typically have Palma ratios around 1, while highly unequal countries may exceed 7.

Why is Palma preferred to Gini by some economists?

The Palma ratio is more interpretable and focuses on the politically salient extremes. Gini is heavily influenced by the middle classes (who are relatively stable across countries), whereas Palma captures the polarisation that matters most for social cohesion.

Palma Ratio Income Inequality

Calculate the Palma ratio — the income share of the top 10% divided by the income share of the bottom 40% — as an inequality measure sensitive to extremes of the distribution. Advocated by Alex Cobham and Andy Sumner.

Data set — comma or newline separated

Statistical Results — n = 8

Count (n)8

Sum (Σx)40

Min2

Max9

Range7

Q14

Q35.5

IQR1.5

Mean (μ)5

Median4.5

Mode4

Pop. Variance (σ²)4

Pop. Std Dev (σ)2

Sample Variance (s²)4.571428571

Sample Std Dev (s)2.138089935

Skewness0.65625

Excess Kurtosis-0.21875

How to Use

Enter the values for the scenario you are assessing. Calculate the Palma ratio — the income share of the top 10% divided by the income share of the bottom 40% — as an inequality measure sensitive to extremes of the distribution. Advocated by Alex Cobham and Andy Sumner. Use the palma ratio result to inform your calculation.

Palma Ratio Income Inequality

How to Use

Frequently Asked Questions

What does a Palma ratio of 2 mean?

Why is Palma preferred to Gini by some economists?