Although the latest report from the Statistical Center of Iran indicates a decreasing trend in Iran’s Gini coefficient, which reflects income inequality, studies show that without considering the uninterrupted increase in inflation and the decrease in purchasing power parity, the result of a fair distribution of wealth cannot be achieved.
The Gini coefficient measures the distribution of income and wealth among different individuals in a specific period of time and indicates how the economic situation of individuals has changed.
Persistent inflation and sudden inflationary spikes, especially in the past five years, have led, according to official regime statistics, to a significant decrease in purchasing power parity (PPP) for the people and nearly half of Iran’s population falling below the poverty line.
However, the Statistical Center of Iran, in a recently published report, has announced that in 2022, the Gini coefficient for households in the entire country was 0.3877, indicating a decrease of 0.0061 compared to the previous year.
The Gini coefficient, which is used to measure income or wealth inequality in a country or any other group of people, is a number between 0 and 1. The closer the Gini coefficient is to zero, the better the economic situation and the greater the economic equality. On the other hand, as this index approaches the number one, it indicates an unfair and unequal distribution of wealth.
An analysis of the details of the Statistical Center’s report indicates the fact that although industrial provinces such as Kerman, Isfahan, Semnan, and Qazvin are ranked as provinces with low Gini coefficients, Ilam, which is one of Iran’s deprived provinces in terms of fair wealth distribution, is introduced as the second province with a low Gini coefficient in the Statistical Center’s studies.
On the other hand, despite its proximity to oil-rich regions and the presence of hundreds of oil-industrial complexes, Bushehr Province is classified as one of the provinces with a high Gini coefficient.
It seems that such a picture of Iran’s economy cannot reflect the realities of Iranian society.
Hidden and explicit points in the report
As mentioned, the Gini coefficient alone is not enough to demonstrate fair wealth distribution in a society, and it is necessary to consider other components such as Gross Domestic Product (GDP), Purchasing Power Parity (PPP), and the prosperity index to measure the level of well-being.
Since wealth distribution has a direct relationship with the well-being of citizens in a country’s economy, wealth distribution is defined based on the Gross Domestic Product index, which reflects the real value of all products and services produced by a nation within its borders.
The International Monetary Fund reported Iran as the 22nd largest economy in the world based on GDP in 2022. The question is whether the well-being and wealth distribution in Iran, as the 22nd largest economy in the world, also confirm this.
To further investigate, we examine two other indices: the Economic Prosperity Index and Purchasing Power Parity.
The latest report related to the global prosperity index by the Legatum Prosperity Index in 2022 indicates that Iran is ranked 126th out of 167 countries surveyed.
At the same time, in the same year, according to the International Monetary Fund, Iran’s ranking in the Purchasing Power Parity (PPP) index is 85th in the world.
Comparing these three indices with each other suggests that wealth distribution and purchasing power parity in 2022 have not improved in proportion to Iran’s gross domestic product. The real measure of each Iranian’s benefit from national gross production becomes more accurate when other indices improve accordingly.
Economists believe that in some countries like Iran, the best method of measuring the Gini coefficient is to calculate income distribution rather than assets and wealth since it is possible for an individual who has a good financial status to experience a decrease in income for any reason during the period under review, while their assets and wealth remain unchanged. Such conditions can have a misleading impact on measuring the Gini coefficient.
Fair distribution of poverty
Alongside the global picture of fair wealth distribution in Iran, other indicators can be added to assess whether the economic situation of the people has changed during the mentioned period.
Inflation rate, unemployment rate, and the poverty index are three components that statistics show have deteriorated rather than improved over the past five years.
In June, the Majlis (parliament) Research Center announced in an official report that the poverty line in Iran has grown by about 65% in the past two years. According to this government institution, the poverty rate has pushed approximately 11 million people below the poverty line over a decade.
Following that, the regime’s Jamaran website, cited economist Farshad Momeni as saying that almost one out of every three Iranians is considered absolutely poor. Farshad Momeni stated this based on reports from the Statistical Center and said that for the first time in the past 100 years, Iran’s impoverished population has doubled in less than three years.
At the same time that the people of Iran become poorer, a small group, mostly beneficiaries and affiliates of powerful and wealthy institutions, has seen an increase in their wealth and assets.
