SOC100- lecture 5

Economic Inequality

The unequal distribution of income, wealth, and opportunities across individuals and groups.

Operationalizing

Turning abstract concepts into measurable indicators.

Dunning-Kruger Effect

When people with low ability overestimate their knowledge or competence.

Inflation

The general increase in prices over time, reducing purchasing power.

Consumer Price Index

A measure of inflation tracking the cost of a “basket” of common consumer goods.

Average vs. Median Income

Average is pulled upward by the rich; median shows the middle person and represents typical earnings more accurately.

Active vs. Passive Income

Active: earned through labor; Passive: earned from investments like rent, dividends, or interest.

Stocks and Bonds

Stocks: ownership in a company; Bonds: loans to a company or government that pay interest.

Matthew Effect

Advantage accumulates for those already advantaged, while disadvantage compounds for those at the bottom.

Achieved and Ascribed Statuses

Achieved: earned through actions; Ascribed: given at birth (e.g., race, family income).

Income Quintiles

Dividing the population into five equal groups to compare income distribution.

Before-Tax/Market Income

Income earned from the labor market before taxes or government transfers.

After-Tax Income

Income remaining after taxes and adding government benefits; shows true disposable income.

Gini Coefficient

A numerical measure of inequality from 0 (equal) to 1 (max inequality).

3 reasons for rising wealth inequality

Globalization; Declining labor unions; Rising housing and asset values benefiting the wealthy.

Labour Union

A group of workers who collectively bargain for better wages, benefits, and conditions.

Oligopoly

A market dominated by a small number of large companies.

2 reasons for lack of recognition and response to rising inequality

People compare themselves to nearby peers; Inequality is hidden in everyday life.

Invisible Inequality

When inequality isn’t noticed because people mostly interact within their own class.

Absolute, Relative, and Extreme Poverty

Absolute: lacking basic necessities; Relative: poor compared to societal standards; Extreme: living on less than $2.15/day.