Econ chapter 18

Poverty

37 dollars per person by week. Family of four, the poverty line is $23,021

The Gini Coefficient

A gini coefficient of zero would be perfect equality, since area A is 1 if income is perfectly equally distributed.

Lorenz curve

A perfectly equal distribution of income would be represented by a diagonal line.

Absolute number

Always changing due to inflation.

The gini coefficient

Area A/ (Areas A+B)

Poverty

Can be defined as a relative or absolute concept.

Poverty

Defined by the U.S government as having an income equal to or less than three times an average family's minimum food expenditures as calculated by the US department of agriculture.

GNP

GNP always larger than GDP. Produced somewhere else not in the county.

Middle class

Getting smaller and smaller which causes a serious problem.

International dimensions of income inequality

IS the U.S distribution of income more or less equal than others country's? How is income is distributed among countries?

Wealth

In the United States wealth is significantly more unequally distributed than is income.

Food basket

Income has to be 3 to 4 times

Share distribution

Income is the relative division of total income among income groups.

Socioeconomic

Income is the relative division or allocation of total income among relevant socioeconomics groups.

Income

Income is unequally distributed among the countries of the world. These

Lorenz curve

Income on the vertical

Lorenz curve

Is a geometric representation of the share distribution of income among families in a given country at a given time.

Millionaire's club

Is no longer highly exclusive.

Income

Is payments received plus or minus changes in value in a person's assets in a specified time period.

Wealth

Is the value of the things individuals own less the value of what they owe.

Lorenz curve

Measures the cumulative percentage of families on the horizontal axis from poor to richest.

Same percent of income

Same percent of families. Some distribution of income.

The Gini Coefficient

So all Gini coefficents must be between 0 and 1. The lower the Gini coefficients the closer the income distribution is to being equal.

Two ways income distribution is looked at

Socioeconomics Share distribution

The distribution of wealth

Wealth, value of things individuals own less the value of what they owe.

Lorenz curve

always have line of absolute equality

Long

fixed

Wealth stock concept

in the bank. No time period. statement.

More curve is away from absolute inequality

less equal income distribution

More curve is closest to absolute inequality

more equal income distribution.

Poverty Threshold

the income below which a family is considered to live in poverty.

Income flow concept

time period- flow coming in. Losing a pound, flow

Comparing income distribution across countries

The United States has less income inequality than most developing countries but more income inequality than many developed countries.