Inequality – AS/A LEVELS/IB/IAL

Exam Boards: Edexcel, AQA, WJEC, CIE, OCR. Level: AS/A LEVELS/IB/IAL

Inequality

Inequality is the unequal distribution of income and opportunity between different groups in society.

What is the difference between income and wealth?

Income 

Income is a flow concept, e.g. the money earned over a period of time. This is usually generated from a salary. 

Wealth 

This is a stock concept and to do with the assets a person owns. E.g. property, shares, car, yacht etc.

What can be used to measure Income Inequality

The Lorenz Curve

The Lorenz curve highlights the income distribution of a country against its population.

Source: qualifications.pearson.com

The further the Lorenz curve is from the 45-degree line, the less equal the distribution of income will be.

Perfect equality would be, for example, where 50% of the population gain 50% of the income or 70% of the population gain 70% of the income.

Gini coefficient

• A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income).
• A Gini coefficient of one (or 100%) expresses maximal inequality among values (e.g., for a large number of people, where only one person has all the income)