By the end of this section, you should be able to: Describe global stratification Differentiate the development history of various classification systems Use terminology from Wallerstein’s world systems approach Explain the World Bank’s classification of economies Just as the United States' wealth is increasingly concentrated among its richest citizens, global inequality concentrates resources within certain nations and among certain people. Measuring the financial resource of the world's richest people is generally easier than measuring the resources of people living in poverty (Matthews 2019), but researchers and advocates have created some tools to evaluate and understand economic conditions and outcomes. One straightforward method is to compare the ratio of income of the richest 10 percent to the income of the poorest 10 percent. (The same method is sometime used with the richest 20 percent and the poorest 20 percent.) This method does not always provide a full picture of income inequality (it literally leaves out the middle), but it can certain provide insight. The Human Development Index expresses the capabilities of people's potential achievement. The index is calculated using data regarding people's lifespan, education, and income. By using both financial and non-financial factors, it paints a deeper picture of the lives and issues in a region. For example, a nation with high income but low education will still have difficulty in overall opportunity. This approach was developed by Pakistani economist Mahbub ul Haq, who produced the first annual Human Development report, which captures and illustrates development issues and changes each year. Figure 10.2 The Human Development Index and its derivative, and extensions like the Inequality-adjusted Human Development Index (IHDI), were developed to center people—not just finances—as the core determinants of a nation's or region's discussions about economic opportunities, support, and policies. The index considers three main dimension (categories)—which are health, knowledge, and standard of living (income)—to calculate an individual value for each dimension, which is then averaged to produce the final value. (Under decent standard of living, GNI stands for gross national income, and PPP stands for purchasing power parity, both of which are key indicators of income and relative wealth.) (Credit: United Nations Development Programme) Another measure of inequality is Gini Coefficient, named after the Italian sociologist and statistician Corrado Gini. (Be sure not to confuse this with GNI, which is the gross national income.) It is is calculated using a number of financial indicators, and is expressed as either a decimal or a percentage. A country in which every resident has the same income would have a Gini coefficient of 0 (or 0 percent). A country in which one resident earned all the income, while everyone else earned nothing, would have an income Gini coefficient of 1 (or 100 percent). Thus, the higher the number (the closer to that one person having all the income or wealth), the more inequality there is. Other gauges are a bit more direct: To indicate the level of poverty within a nation or region, researchers calculate the percentage of the population living beneath various poverty thresholds. A common measure is to consider the percentage of a nation's population living on less than $1.90 per day, which is commonly known as the International Poverty Line. (Note that United States dollars are often used as a global standard in these types of measurement.) The table in the next sub-section uses this method. These are just a few of the ways that sociologists, economists, governments, and others try to understand levels of income inequality and poverty. Changes in these indicators would alert policymakers that something is affecting the population. No changes might tell people that, for example, a new financial assistance program for the poor is not working. With these analytical elements in mind, let’s consider how the three major sociological perspectives might contribute to our understanding of global inequality. The functionalist perspective is a macroanalytical view that focuses on the way that all aspects of society are integral to the continued health and viability of the whole. A functionalist might focus on why we have global inequality and what social purposes it serves. This view might assert, for example, that we have global inequality because some nations are better than others at adapting to new technologies and profiting from a globalized economy, and that when core nation companies locate in peripheral nations, they expand the local economy and benefit the workers. Conflict theory focuses on the creation and reproduction of inequality. A conflict theorist would likely address the systematic inequality created when core nations exploit the resources of peripheral nations. For example, how many U.S. companies take advantage of overseas workers who lack the constitutional protection and guaranteed minimum wages that exist in the United States? Doing so allows them to maximize profits, but at what cost? The symbolic interaction perspective studies the day-to-day impact of global inequality, the meanings individuals attach to global stratification, and the subjective nature of poverty. Someone applying this view to global inequality would probably focus on understanding the difference between what someone living in a core nation defines as poverty (relative poverty, defined as being unable to live the lifestyle of the average person in your country) and what someone living in a peripheral nation defines as poverty (extreme poverty, defined as being barely able, or unable, to afford basic necessities, such as food).