Project 1
Due Date: 10/05 before 11:59pm Pacific Daylight Time (late assignments will not be accepted).
You should solve the project in Excel, but you don’t have to submit your file for grading. Please submit your answers to the items below to the course page (under the tab Project 1). You can submit your answers as MANY TIMES AS YOU WANT. You will seeyour score each time.
Overview
In this project you will have to construct some of the measures mentioned in the lecture regarding inequality. Your TA will discuss the insights we hope you gain from these exercises in the section.
For each answer, please round your answers as instructed. Answers that are not rounded appropriately will be marked incorrect.
The data used for this project (Project 1.xlsx) is arepresentative sample of income for 2008 in the US. Note that your data only has one column (income).
Tasks:
The primary goal of this project is for you to identify the values of different percentiles and income shares.
(1) Identify the income at the 50th percentile, the top 90th and the top 99th. Round to the nearest hundred when submitting: if your answer is 1765 submit 1800, if your answer is 1735 submit 1700. (Hint: use the
PERCENTILE function)
(2) Calculate the Top 50, Top 10 and Top 1 income share. Round this value to the closest number after the comma, example: if you get 0.2345, submit 0.2, if you get 0.2789 submit 0.3. (Hint: start by sorting your data then calculating the cumulative sum.)
(3) Let’s define relative poverty as the fraction of population with income below 60% of the median income. What is the relative poverty rate? Round this value to the closest whole number, example: if you get 3.3%, submit 3%, if you get 3.8% submit 4%. (Hint: you already know the median income. Use COUNTIF function.)
Definitions for this project:
Percentiles: then-th percentile describes the value below which n% of the data, when sorted, fall. For example, the 50th percentile is the value for which half of the observations are above and half below. The 50th percentile is also called the “median” .
Top 1: when sorted, the largest 1% of observations
Income share: fraction of total income that a particular group holds.
Top 10 income share: measures the share of total income that is earned by the 10% richest individuals.
Relative poverty: number of individuals with income below X%*median divided by total number of individuals times 100.
Grading Rubric:
Required to do (1): 2 points
Required to do (2): 2 points
Required to do (3): 2 points