7.0 The distribution of income and wealth: poverty and inequality (All in 1)

What is the difference between income and wealth

Income is the flow of money received over time, such as wages or interest. Wealth is a stock of assets owned at a point in time, like property or shares

What factors influence the distribution of income and wealth

Factors include:

• Education

• Inheritance

• Taxation policies

• Wage levels

• Access to employment

What is the difference between equality and equity in income and wealth distribution

Equality means everyone receives the same income or wealth. Equity involves fairness, where distribution considers individual needs and circumstances

What is the Lorenz Curve

A graphical representation showing the proportion of total income earned by cumulative percentages of the population, illustrating income inequality

What is the Gini coefficient

A measure of equality within an economy, with 0 being perfect equality and 1 being perfect inequality

What are the benefits of a more equal income and wealth distribution

Benefits include:

• Reduced poverty

• improved social cohesion

• potentially higher economic growth

What are the costs of a more equal income and wealth distribution

• Reduced Incentive for innovation, due to risk taking rewards being diminished

• Less incentive to work, due to benefits being high

What is UK’s gini coeffecient now

0.36

What is absolute poverty

A condition where individuals lack the basic necessities for survival, such as food, shelter, and clean water

What is relative poverty

Refers to a state where a household's income is significantly lower than the median income within a country. (60% lower than median income in the UK)

What are common causes of poverty

Causes include:

• Unemployment

• Low wages

• Lack of education

• Economic Downturns

• Poverty Trap

What are the effects of poverty

Effects include:

• Poor health

• Limited access to education

• Increased social unrest

• Higher crime rates

What policies can influence income and wealth distribution

Policies include:

• Progressive tax system

• Welfare Benefits

• Minimum Wage

• Education Funding

• Wealth Tax

What is a progressive tax system

A tax system where the tax rate increases as the taxable amount increases, shifting more tax burden to higher income earners.

What is a wealth tax and why is it controversial

A tax on an individual's net worth, designed to reduce wealth inequality. It is controversial due to concerns about its economic impact and the fairness of the policy

How do value judgements influence views on equitable distribution

Individuals' beliefs about fairness and justice shape their opinions on what constitutes an equitable income and wealth distribution.