Income-inequality figures in the U.S. overstate the gap between rich and poor, because of what’s known as the “Walmart effect”: As the number of poor people in a country rises, the market for inexpensive products expands and the purchasing power of the poor increases. In measuring this effect, Andreas Bergh and Therese Nilsson of Lund University in Sweden found that a 10-point increase in a country’s rank on the 0-to-100 Gini scale of inequality decreases the minutes of labor required for the poor to buy a Big Mac (a classic inexpensive product) by 15 minutes. Income inequality is an inadequate indicator of the welfare of the poor, the researchers say.
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