Inequality

Question 1

Define Equality

Answer 1

data can show the notion of what is “equal” (a positive concept)

Question 2

Define Equity

Answer 2

the notion of what is fair (a normative concept; opinion)

Question 3

What are the x and y axis on the lorenz curve?

Answer 3

X axis: cumulative % of the population
Y axis: cumulative % of income
(Both rise in 10s)

Question 4

What does the Lorenz curve show?

Answer 4

shows us how our income is distributed
- Allows us to see where income is more or less equally distributed

Question 5

What does it mean if we are close to the line of equality?

Answer 5

=more equal

Question 6

What does it mean if we are further away from the line of equality?

Answer 6

= less equal

Question 7

Calculation for the Gini coefficient?

Answer 7

A / (A+B)

Question 8

What is the gini coefficient?

Answer 8

a statistical measure of the degree of variation represented in a set of values, used especially in analysing income inequality.

0 = absolute equality
1 = absolute inequality

Question 9

What are market incomes?

Answer 9

Wages, profits, etc (earned)

Question 10

What is disposable income?

Answer 10

after taxes and transfers
- Progressive taxes
- Welfare payments
- Targeted subsidies (Community services card)

Question 11

Is inequality good or bad?

Answer 11

Inequality is not implicitly bad. Neither is it implicitly good. The right level of inequality is a normative concept.

Question 12

What shape does income inequality take?

Answer 12

Globally, within country income inequality has followed a U shape since the start of the 20th Century (decreasing then increasing again). In the last 50 years, average and median incomes increase but the top has risen fastest (superstar effect) which increases inequality.

Question 13

What is not captured by income inequality measures is?

Answer 13

• Income mobility (how hard is it to go up the scale including by aging)
  • How incomes are changing in absolute terms (rising real incomes at the bottom are still a good thing)
  • Exactly why inequality is rising. Rising inequality due to the rich getting richer and the poor poorer is different to where everyone is getting richer but the top is rising faster than the bottom

Question 14

What are the differences between wealth and income inequality?

Answer 14

• Wealth is less equal than income
  
  • Many older people are income poor but wealth rich
  • Poorer and less wealth when your younger compared to older