TAILIEUCHUNG - Lecture Economics (9/e): Chapter 18 - David C. Colander
Chapter 18 - Who gets what? The distribution of income. After reading this chapter, you should be able to: Explain how income, wealth, and poverty are measured, and how their real-world measures changed over time; summarize the socioeconomic tensions that high income and wealth inequalities can cause; explain why there are so many philosophical debates about equality and fairness, and summarize some of them. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 1 Chapter Goals Explain how income, wealth, and poverty are measured, and how their real-world measures changed over time Explain why there are so many philosophical debates about equality and fairness, and summarize some of them Summarize the socioeconomic tensions that high income and wealth inequalities can cause Discuss the practical and theoretical problems of redistributing income 2 Measuring the Distribution of Income, Wealth, and Poverty Share distribution of income is the relative division of total income among income groups Socioeconomic distribution of income is the allocation of income among relevant socioeconomic groups For example, it measures how much income the top 5% or 15%, or the bottom 10% gets For example, how much do women get compared to men, old compared to young, black compared to white 3 The Lorenz Curve A Lorenz curve is a geometric representation of the share distribution of income among families in a given country at a given time Both axes start at zero and end at 100% It measures the cumulative percentage of families on the horizontal axis, arranged from poorest to richest, and the cumulative percentage of family income on the vertical axis 4 Defining Poverty Poverty can be defined as a relative or absolute concept The . government definition of poverty is a combination of a relative and an absolute measure The poverty threshold is the income below which a family is considered to live in poverty Equal to or less than three times an average family’s USDA-calculated minimum food expenditures 5 The Distribution of Wealth Wealth is the value of things individuals own less the value of what they owe It is a stock concept representing the value of assets such as houses, buildings, and machines Income is payments received plus or minus changes in value of a person’s assets in a specified time period It is a flow concept, a stream through time In the
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