According to most conventional measures, income inequality in the developed world has been rising. This trend has been argued to be particularly prevalent in the UK and USA, but the article below from The Economist argues that conventional measures may be mis-representing the differences between the better off and the less well off. Instead of looking at income inequality, it looks at consumption inequality.
The new (improved) Gilded age The Economist (19/12/07)
Questions
| 1. |
Define the terms (a) income inequality and (b) consumption inequality. |
| 2. |
Assess the extent to which income represents a good measure of economic wellbeing. |
| 3. |
Discuss two policies that could be used to reduce (a) income inequality and (b) consumption inequality. |
During the period that Mrs Thatcher was in office, the post-war trend towards greater equality of income was reversed. Although some of the changes the Labour government has made since 1997 have helped those on lower incomes, the rise in incomes at the top of the scale has meant that the gap between rich and poor has widened again. The article below from the Guardian looks at the latest figures on income inequality.
Inequality at same level as under Thatcher Guardian (18/5/07)
Questions |
| 1. |
Define the terms (a) Lorenz curve and (b) Gini coefficient. |
| 2. |
Given the changes in income distribution outlined in the article, discuss how the value of the Gini coefficient has changed since 1997. |
| 3. |
Draw Lorenz curves to show the changes that have taken place in income distribution during Mrs Thatcher’s period in office and during Tony Blair’s time in office. |
| 4. |
Analyse two policies that the government could introduce to reverse these income distribution trends. |