The Distribution of Purchasing Power in Pakistan, 1985-86

Abstract

Suppose that you and I earn the average income of Pakistan and that we are looking at a parade in which the whole population of Pakistan takes part. It is a spectacular parade because the size of all marchers is proportionate to their income. We have the average height. Anyone who earns more than the average is taller than we are; anyone who earns less than the average is smaller. The procession is organized in such a way that the smallest walks in front and the tallest in the rear. The parade moves at uniform speed and its dUration is one hour exactly. What do we see? What is the size of the marchers in front and in the rear? Who passes by during the first ten minutes, the second ten minutes, etc.? Where do they live, in which pr<?vince, in urban or in rural areas? How long does it take before we see people of our own length? Who are they? Section 4 presents the Pakistani Parade and tries to answer these questions. 1 But before being able to form the queue by putting everybody in its correct position, we need to discuss the way of estimating the size of each person, and therefore, the choice of the concepts of income and income units (Section 3), the data base, the choice between using grouped data versus tape data, and the related type of computer required (PC versus mainframe) for these calculations (Section 2). Actually, the contribution of this paper is twofold. First, the presentation of the Pakistani Parade, and secondly, after having made adjustments for economies of scale of households earlier by using equivalence scales [Kruijk (1987)], this paper standardizes these adjusted household incomes further by correcting for differences in average price levels between provinces and between urban and rural areas as announced but not executed in Kruijk (1986). After these adjustments, the term 'distribution of income' is no longer a proper description of what finally is ranked. Accordingly, the title of the present paper is now called 'The distribution of purchasing power in Pakistan, 1985-86'.