W5 Income Inequality

Economic Inequality

Disparity in the distribution of income between individuals, groups, populations, social classes, or countries.

Operationalizing

The process of turning abstract concepts into measurable observations.

Consumer Price Index (CPI)

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Median Income

The middle value of income when all scores are ranked from lowest to highest.

Average Income

Total income divided by the number of earners, which can be distorted by extremely high or low incomes.

Active Income

Income gained by exchanging time for money, usually through paid employment.

Passive Income

Income that is not tied to active labor, such as earnings from investments.

Matthew Effect

The principle that advantages accumulate in ways that allow the rich to get richer.

Ascribed Status

Attributes assigned at birth that involve inherent advantages or disadvantages.

Achieved Status

Attributes developed throughout life as a result of effort and skill.

Gini Coefficient

A measure of income inequality on a scale from 0 (perfect equality) to 1 (perfect inequality).

Income Quintiles

A division of the population into five groups, each representing 20% of the income distribution.

Before Tax or Market Income

Total income earned by a household or person before taxes and transfers.

After Tax Income

Income remaining after taxes and transfers have been deducted.

Oligopoly

A market structure in which a small number of companies have significant control over a market.

Absolute Poverty

The lack of resources necessary for material well-being, such as food, water, and housing.

Relative Poverty

A deficiency in material and economic resources compared with a certain population.

Extreme Poverty

Living on less than $2.15 a day.

Net Worth

The total value of a person's assets minus their liabilities.

Invisible Inequality

Inequality that is not easily seen, often due to unacknowledged debts.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Income Inequality

The unequal distribution of income across different participants in an economy.

Progressive Taxation

A tax system in which higher income earners pay a larger percentage of their income in taxes compared to lower income earners.

Chronic Stress

Long-term stress that can have negative effects on health.