Monday, April 23, 2012

Is there a connection between Democracy & Economic Equality?

I have always wondered if there was a connection between how Democratic a county is and the level of economic equality in that county.  It is easy to think that Democracy could lead a country to being more equal since the poor would have a political voice and would most likely vote for their economic interests.  It is also easy to see how the upper class in a society could take over democratic institutions and entrench the existing economic distribution of wealth.  I decided that instead of just doing the normal google searches for academic papers on the topic this time I would actually try to do something with publicly available data.

To measure how Democratic a nation is I used the Democracy Index which is complied by the Economist Intelligence Unit.

http://en.wikipedia.org/wiki/Democracy_Index

To measure economic equality i used the Gini coefficient as put out by the world bank

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

I decided to do a scatter plot of those two pieces of data and see if any obvious correlations could be seen.

First i did all nations.

Not seeing anything obvious here.  So next i decided to just look at poorer nations.  To do this i only looked at non-OECD nations.

Again no real obvious correlation here.  Next i decided to look at rich nations so i looked at just the OECD countries.

Well there might be a very small correlation but nothing is very obvious from this.

So after all that work the results could best be described as nothing.  I didn't find any obvious correlation between level of Democracy in a country and the level of economic equality in that country.  

This doesn't mean that there is not some type of correlation.  I would almost certainly imagine there is some type of link between these two things but that this very simple exercise didn't find anything.  Both the indexes i used have their own issues which you can read about on the wikipedia pages i linked to.  Also we would probably need to look at the data over time if we wanted to really know how Democracy might influence economic equality.

If you want to look at the data i used here is a link to the google doc


Also I would love to hear what people think about the connection between Democracy and economic equality in the comments.  Do you think there might be a link?  Why or why not?

Please remember that this was a random project and should NOT be used as any type of evidence for anything.