The Lorenz curve is a graphical illustration used to show the level of equality or inequality in a given society. The Gini coefficient is a numerical measure of inequality based on the Lorenz curve. It can be shown in percentages or by a maximum figure of 1. In the graph below, the blue line represents perfect equality in wealth distribution. For example, it shows that 20% of the wealth is own by 20% of the household. It also shows that 60% of the wealth is owned by 60% of the household. When wealth is distributed unequally (as is the case in the real world) the line curves downward, below the diagonal line. The greater the inequality, the more the line curves away from the diagonal line. In the following graph (looking at the green line)
What is wealth inequality? “It is the difference between individuals or populations in the distribution of assets, wealth or income.” [1] In sociology, the term is social stratification and refers to “a system of structured social inequality” [2] where the inequality might be in power, resources, social standing/class or perceived worth. In the US, where a class system exists (as opposed to a caste or estate system), your place in the class system can be determined by your personal achievements. However, the economic and social class that an individual is born into is a big indicator of the class they will end up in as an adult.
Wealth inequality did not always exist in human life. In fact, “Human life have not only been changed, but revolutionized, within the past hundred years” (Carnegie 1). There used to be
The distribution of wealth is a basically the view on wealth, and the various members or groups in a society. Of course, it differs from the distribution of income in that it looks at the distribution of ownership of the assets in a society, rather that the current income of members of that society. Wealth is the amount of liabilities being taken away from the amount of assets. The world always calculates wealth base off ones’ income, but the do relates with a simple factor of expenses. Distribution of wealth can also be a luck factor, it can be based off family income and family inheritance things of that nature. Distribution of wealth is based of the nation, which is controlled by the government in many cases, like when it comes to taxes
Wealth inequality and income inequality are often mistaken as the same thing. Income inequality is the difference of yearly salary throughout the population.1 Wealth inequality is the difference of all assets within a population.2 The United States has a high degree of wealth distribution between rich and poor than any other majorly developed nation.3
The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.
A plethora of research studies exist on the topic of wealth inequality in America. There is no question that the top one percent of earners consume a large portion of wealth in this country while the other 90 percent of earners share the left-overs. Some of the related questions that I found during the course of my research are 1) Why are wealth and income distributions so vastly disproportionate? 2) Can America bridge the wealth gap? 3) If so, how? 4) Has the wealth gap increased over time? 5) Are there public policies that influence wealth inequality? And, 6) Is America’s middle-class growing poor? Those are just a few of the many questions that circulate the discussion on wealth inequality in America. However, the two
•Equity is studied to determine whether resources are distributed fairly to all members of a society.
Income inequality not only harms us fiscally, but also affects our mental and physical wellbeing; therefore, it is important to identify the right ways to control wealth distribution among people.
Income inequality in the United States, as of 2007, has reached levels not seen since 1928. In 1928, the top one percent received nearly 24% of all income within the United States (Volscho & Kelly, 2012). This percentage fell to nearly nine percent in 1975, but has risen to 23.5% as of 2007 (Volscho & Kelly, 2012). Meanwhile, in 2007 (see
Time and time again we hear politicians and office holders preach the need for a powerful middle-class. You may then be surprised to hear that “about 82% of America’s net worth belongs to the top 20%, the next 80% of people only own about 18% of America’s wealth” (UCSC). Some may argue that this disproportion is the beauty of capitalism, the chance to create an empire. I argue that the proportions are simply unfair. Why is it that “ the average CEO makes 350X as much as his/her employee” (UCSC)?
Inequality exist and is high in America because the amount of income and wealth that is distributed through power. In America the income distribution is very inequality and the value of a person wealth is based on their income with their debts subtracted. “As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)” (Domhoff, 2011). In contrary the poor do not get ahead and the rich get more. Americans are judged and placed in class categories through their home ownership which translates to wealth. Americans social class is often associated with their assets and wealth. “People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives” (Domhoff, 2011). Power indicates how these “values” are not distributed equally in American society. Huge gains for the rich include cuts in capital gains and dividends and when tax rates decrease for the tiny percent of Americans income is redistributed. Taxes directly affect the wealth and income of Americans every year.
Inequality as previously mentioned is a subject that gets debated when brought up and in any debate there is two sides. In class we have discussed both side of the story of inequality, and it has give me a better perspectives of income inequality. When discussion income inequality, we brought up the concept of the economic pie in which states that the economic pie is a reference to the way income gets distributed among the lower, middle, and higher class of America. So the concept of the economic pie states that the rich is getting richer, so they are
Pettinger, Tejvan. “Pros and Cons of Inequality.” Economics Help. 18 Oct. 2011. Web. 13 Feb. 2014.
The disparity between the poor and the wealthy is substantial. There is an obvious gap between the social class of the rich and poor in capitalism. Wealth is earned and no one is given
Wealth inequality is the uneven distribution of resources in a given state or population, which can also be called the wealth gap. The sum of one’s total assets excluding the liabilities equates the person’s wealth also known as the net worth. Investments, residents, cash, real estates and everything owned by an individual are their assets.In reality, the United States is among the richest countries in the world, though a few people creating a major gap between the richest, the middle class and the poor control most of its wealth. For more than a quarter of a century, only the rich American families have shown an increase to their net worth.Thisis a worrying fact for the less fortunate in the country and calls for assessment (Baranoff, 2015).