3.3 - Fair Distribution of Income

what is distribution of income

how the total incomes of the economy are shared out among its people

what is a counter point to ‘inequality of income is bad’

does inequality matter especially if we are all getting richer due to the economy and GDP growing

what are different types of income

wages - most income comes from this

rent - for owners of land and property

interest - received from saving can be income especially for old people

a share of profits - for those who have invested in a business

some people who have none of the above can get income from state benefits

what is the difference between income and wealth

income is a flow of money over time whereas wealth is a stock concept at one point in time

how is income distributed

gross - before tax and benefits

net - after tax and benefits which is disposable income

what are reasons for uneven income distribution

income earning assets are distributed unevenly

differences in wages

reliance on benefits

age gender and race

what are reasons for uneven wealth distribution

inheritance and savings and purchase of property and enterprise

what are consequences of inequality

poverty and deprivation - those at the bottom cannot afford to live

poor housing - no one can afford a house and those that can’t can be exploited as shelter is a need

poor health - if you cannot afford basic needs

inequality of opportunity - ‘old boys network’ nepotism and contacts

creates incentives - inequality makes people want to work harder so they can earn more