ECO1013
PRINCIPLES OF ECONOMICS
SEMESTER 1 - TUTORIAL 2
PART 1
This tutorial will introduce the data source and prepare you to use the
appropriate data to support your arguments in your essay. In this tutorial
we will look at the correlation between two series. We will use the same
data from the last tutorial to look at the correlation between the Gini
index and Income per capita and how change in inequality are related to
economic growth. We will also see how inequality in 2020 depends on
inequality in 2000 and the relation between the Gini Index and the share
of income help by the top 10%
Open the Excel File you saved last week which includes data on GDP
per capita, Gini Index and income by the Top 10%.
Make sure that columns are ordered in the following way: GDP per
capita in 2000, Income share by the Top 10% in 2000, Income share
held by the Bottom 10% in 2000, Gini index in 2000. Then GDP per
capita in 2020, Income share by the Top and Bottom in 2020 and
Gini in 2020.
Sort the Gini Index in 2020 from A to Z.
Select the column for the Gini Index in 2020 for countries for which
data on Gini is available as shown below. Select the column for GDP
per capita in 2020. Click Insert Scatter as shown below. Choose a
Scatter Plot. This should produce a scatter plot showing the
relationship between Inequality and GDP per capita.
Provide a short explanation of the relationship between Inequality and GDP per capita.
Generate the rate of growth of income per capita. Select and empty cell in the second row
and type in Formula Tab: =(G2-C2)/C2. G2 is the cell for Income per capita in 2020 and C2 is
the cell for Income per capita in 2000. Drag down cells to complete the series for other
countries.
Generate the difference in inequality between 2020 and 2000 as show below.
For several countries there is no data on the change in inequality (reported as #VALUE!)
because data on Gini in 2000 is missing. Delete countries/rows for which data on the change
in inequality is not available.
Do a scatter plot between GDP growth and change in inequality. Select columns for GDP
Growth and Change in Inequality till the cell for which data is available (as shown below).
Click Insert and scatter plot.
What is you interpretation of this scatter plot?
Do a scatter plot of the Gini index in 2020 against the Gini index in 2000. Follow same steps
as above. What does the figure show?
Do a scatter plot of the Gini index in 2020 against the share of income held by the highest
10%. What is the relationship between these two series? Can you explain why find such a
relationship?
PART 2
Watch the video of a speech by Robert Kennedy here (full text here) and,
having read the Unit 1 chapter, prepare answers to the following
questions:
a. How do we calculate GDP?
b. What things are included in GDP? What is not included?
c. Is GDP per capita a good measure of well-being?
Additional resources – Not to be covered in class.
The World Bank Open Data provide tools to evaluate the evolution of economic series over the last
decades.
You can browse by country (see below)
Then browse by Theme (see below) and choose measures for inequality (i.e., Gini Indiex, Income
share of the top 10%). You can also add multiple countries to compare the evolution.
