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.