How can we measure economic inequality?
Why might inequality increase as low income countries experience
economic growth
Answer-Economic inequality refers to the inequal distribution of income (the amount of money people are paid) and the inequal distribution of wealth (the amount of wealth people own). Economic inequality may exist in different forms like-economic inequality between countries or states, economic inequality between different groups of people etc.
Measurement of economic inequality focus on wealth, income, and consumption differences. There are many methods for measuring economic inequality but the most widely used ones are- Gini coefficient and Inequality-adjusted Human Development Index (HDI).
1. Gini Coefficient/Gini index /Gini ratio-
In economics, the Gini coefficient/Gini index /Gini ratio is the most commonly used measurement of inequality. It is a statistical tool to measure the dispersion in income or wealth distribution of a nation's residents. The Gini coefficient measures the inequality among values of a frequency distribution (for example, levels of income). The value of Gini coefficient ranges between 0 to 1 where of zero expresses perfect equality, and value of 1 means perfect inequality. In perfect equality all values are the same i.e. where everyone has the same income level. A Gini coefficient of one means only one person has all the income or consumption, and all others have nothing.
2. Human Development Index (HDI)-
Developed by Pakistani economist Mahbub ul Haq and Indian economist Amartya Sen and was used to measure a country's development by the United Nations Development Programme (UNDP)'s Human Development Report Office.The (HDI) is a composite index used to rank countries into four tiers of human development. It includes of life expectancy, education, and per capita income indicators of a country. when the lifespan is higher, the education level is higher, and the gross national income GNI (PPP) per capita is higher, a country scores a higher HDI rank.
The 2010 Human Development Report introduced an Inequality-adjusted Human Development Index (IHDI). The new index does take into account several other factors, such as the net wealth per capita or the relative quality of goods in a country. This helps in accurate ranking for some of the countries.
High and rapid growth often lead to a widening of inequalities in underdeveloped or developing countries. Below are some of the causes of this widening inequality in these countries-
How can we measure economic inequality? Why might inequality increase as low income countries experience economic...
Define economic growth? Discuss how economic growth is measure? Compare and contrast 2 countries and their economic growth over the last 50 years?
From an economic standpoint, why might low income neighborhoods be attractive locations for hazardous waste storage sites?
How do you think low economic status in developed countries compares to low economic status of undeveloped countries? How would a carbon footprint differ between these two groups? (take into account production and transportation costs)
7. Discuss why the nominal GDP per capita is a good measure of a countries economic well being and why it is a poor measure. a. (5 points) Why is the nominal GDP per capita a good measure? b. (5 points) Why is the nominal GDP per capita a poor measure?
Differences in income inequality between countries of similar income levels can primarily be attributed to: O changes in the poverty line. O income redistribution by governments. O skill-biased technical change. O changes in the educational system. Changes in income inequality within countries like the United States in recent years can be attributed to all of the following except. O changes in the poverty line. O international trade. O income redistribution by the government. O skill-biased technical change.
What fiscal policy action might increase investment and speed economic growth? Explain how the policy action would work. A fiscal policy action that might increase investment and speed economic growth is ______ , which works by ______ the real interest rate paid by borrowers and ______ the real interest rate earned by savers and suppliers of loanable funds. A. a decrease in the tax on interest income; lowering; raising B. government borrowing; raising; lowering C. a decrease in the tax...
Question 1 Which of the following is not one of the ways we measure income inequality? A. Income shares of the households with the most income. (wrong) B. The Gini Coefficient. C. Income shares of the households with the most income relative to the income shares of the poorest households. D. The minimum wage. Question 2 Which of the following is not true about the Gini Coefficient? A. A value of 1 means perfect income inequality and a value of...
Most capitalist countries have very little economic inequality. True False There has been an increase in extended family household over the last decade or so in the US True False Sociologists predict which of the following to be true for family life in the US in the future: divorce rates will remain high all of the above children's risk of poverty will increase both household partners/parents will have to work to financially support the family family life will be more...
Some US private universities offer entrance scholarships to low income people. Explain why this might increase university profits?
How we can apply economic theory to the rest of our lives, and also how we can use our experience to be better and more critical consumers of economic knowledge. Economics is an evolving field, and I encourage you to think about ways that you can expand. Does it make sense for people to wait in lines? To pay for seating in a restaurant or airplane? Why or why not? Should everything have a price? Will markets lead to better...