accounting/finance and economic inequality

accounting

• broadly concerned with the measurement of wealth and the financial impact of transactions

  • day-to-day transactions

finance

• raising money (financing)

• spending money (investing)

ten axioms of finance

1. risk-return trade-off

2. time value of money

3. cash-not profits-is king

4. incremental cash flows

5. curse of competitive markets

6. efficient capital markets

7. agency problem

8. taxes bias business decisions

9. all risk is not equal

10. ethical behaviour is doing the right thing

economic inequality

• accounting and finance have an important impact on economic inequality in society

income inequality

• extent to which income is evenly distributed within a population

measuring economic inequality

• cumulative share of income earned by the poorest x% of the population

• gini coefficient

arguments for inequality

• provides incentive for creative people to gamble on new ideas and it turns luxuries into common goods

• if everyone is equal, no one will ever be exception

• mechanism through which the market generates and spread innovation

  • turns into opportunities for individuals

• economy will be stagnate and die leaving widespread poverty behind

inequality and health

• low income inequality = lower deaths of infants

inequality and health

• higher income inequality = lower life expectancy

inequality and social problems

• low income inequality = lower social problems

inequality + race + gender

• inequality has its own effects

  • with income inequality, it becomes worse