4.2.2 Inequality

• What does inequality measure in society?

  Disparity in income or wealth
• Wealth inequality is highly concentrated among the top 1%
• Income inequality is generally more evenly distributed than wealth inequality.
• What tools are used to measure inequality in the distribution of income or wealth?

  Lorenz curve and Gini coefficient
• In a Lorenz curve, a straight diagonal line represents perfect equality
• What numerical range does the Gini coefficient fall between?

  0 to 1
• A Gini coefficient of 1 indicates perfect inequality.
• Match the feature with its tool:

  Graphical representation of distribution ↔️ Lorenz curve

  Numerical value quantifying inequality ↔️ Gini coefficient
• What are the two primary types of inequality?

  Income and wealth inequality
• In a Lorenz curve, the greater the distance between the curve and the diagonal, the higher the inequality
• The Gini coefficient is calculated by dividing the area between the Lorenz curve and the diagonal by the area under the diagonal.
• Match the feature with its tool:

  Visual comparison of distribution ↔️ Lorenz curve

  Numerical measure of inequality ↔️ Gini coefficient
• The Gini coefficient is calculated using the formula $\frac{A}{A + B}$
• In the Gini coefficient formula, $A$ represents the area between the diagonal and the Lorenz curve.
• A Gini coefficient of 0.35 indicates moderate inequality
• A Gini coefficient of 0.65 shows high inequality
• What tools are used for measuring inequality in income or wealth distribution?

  Lorenz Curve and Gini Coefficient
• The Lorenz curve plots the cumulative percentage of the population against the cumulative percentage of income or wealth they hold.
• The Gini coefficient quantifies inequality between 0 and 1.
• What is one factor that contributes to inequality within countries?

  Unequal access to education
• Wage disparities between occupations and skill levels contribute to income inequality
• Globalization and technology can widen the gap between high-skilled and low-skilled workers
• Discrimination based on gender, ethnicity, or religion can lead to social and demographic disparities.
• Match the cause of inequality between countries with its explanation:

  Colonialism ↔️ Exploitation of resources by colonial powers

  Geographic Factors ↔️ Natural resource endowments and climate

  Education and Skills ↔️ Levels of literacy and skill development

  Political Stability and Governance ↔️ Stable environments attract investment
• Inequality is a significant indicator of social well-being and economic opportunity
• What does income inequality measure?

  Differences in earnings
• Wealth inequality is highly concentrated among the top 1% of the population.
• What is the range of values for the Gini coefficient?

  0 to 1
• A Gini coefficient of 0 indicates perfect equality.
• The formula for the Gini coefficient is $Gini\ Coefficient =$$\frac{A}{A + B}$
• What does $A$ represent in the Gini coefficient formula?


  Area between diagonal and Lorenz curve
• Match the feature with its corresponding attribute:

  Lorenz Curve ↔️ Graphical representation

  Gini Coefficient ↔️ Numerical value
• How is inequality interpreted using the Gini coefficient?

  Higher value equals greater inequality
• A Lorenz curve close to the diagonal indicates low inequality.
• A Gini coefficient of 0.35 suggests moderate inequality
• Arrange the following factors contributing to inequality within countries in a logical order:

  1️⃣ Unequal access to education

  2️⃣ Wage disparities

  3️⃣ Globalization and technology

  4️⃣ Regressive tax policies

  5️⃣ Corruption and lack of governance

  6️⃣ Social and demographic factors
• How does unequal access to education contribute to inequality within countries?

  Limits job opportunities and earnings
• Globalization and technology can widen the gap between high-skilled and low-skilled workers.
• What role do social and demographic factors play in contributing to inequality?

  Discrimination leads to disparities
• Inequality between countries arises due to historical, economic, and political factors.