Social Class & Economic Inequality

Lecture 5

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

Dunning-Kruger effect

A cognative bias whereby people with limited knowledge or competence in a given intellectual or social domain greatly overestimate their own knowledge or competence in that domain

Consumer Price Index

Measures inflation. It sets inflation based on the price of a ‘typical basket of goods' (food and shelter, household operations, furnishings and equipment, clothing and footwear, transportation, health and personal care, recreation/eduction/reading, and alcohol, tobacco, cannabis)

Average income

Add up all scores and divide by the total number of scores

Median income

Calculated by ranking all the scores from highest to lowest and reporting the middle number

Active income

Income gained by exchanging time for money usually through a paid job or self-employment

Passive income

Income that is not tied to active labour. In other words, income you do not exchange time for and may actually require no time at all (e.g. investing money in the stock market)

Bonds

Fancy economic way of saying a loan, buying a bond is giving a loan to a company or business that agrees to pay you interest over a set period of time in the same way you pay interest on a car or mortgage or just a credit card balance

Allostatic load

The cumulative burden of chronic stress and life events

The Matthew Effect

The rich staying rich has nothing to do with active/job income, which is what most of us think of when we think of income and the wealthy.

• Advantages accumulates in ways that allow the rich to get richer

Ascribed status

Attributes (advantages and disadvantages) assigned at birth

Achieved status

Attributed (advantages and disadvantages) developed throughout life as a result of effort and skill

Income quintiles

A way to determine how income changed over time for people at different levels of socio-economic status

Before Tax or Market Income

All of the income earned by a household or person

After-Tax Income

Measure of income after taxes and transfers are paid. Since, we have a progressive tax system where the more someone earns, the more tax they pay, looking at after-tax income is a better measure of the changes in inequality

Gini coefficent

• Ranges between 0 and 1

• 0 indicates that income is perfectly distributed over a country - every person has equal income

• 1 indicates that income it totally unequal - one person earns all the income

Labour unions 

Organizations to cooperatively fight for workers rights

Oligopoly

A type of market structure in which small numbers of firms control the market

Net worth

A persons total assets (possessions, money in bank accounts, investments, pension, etc.) minus liabilities (loans, debts, mortgages, etc)

Assets

E.g. real estate value, vehicle value, cash on hand or in bank account, investments, retirement funds

Liabilites

Different kinds of debt such as mortgage, auto mobile, student loans, credit card debt

Invisible inequality

An inequality that exists but is important to see unless someone tells you what their debt load is

Absolute poverty

The lack of resources necessary for wellbeing: food, water, housing, land, and health care

Relative poverty

A deficiency in material and economic resources compared with some other populations

Extreme poverty

Living on less than $2.15 a day