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44 Cards in this Set
- Front
- Back
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Wealth [definition] |
A STOCK of valuable assets |
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What are the two catergories of Wealth? |
> Marketable Wealth > Non-Marketable Wealth |
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Marketable Wealth [definition] |
Wealth that can be transferred to others |
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Non-Marketable Wealth [definition] |
Wealth that is a specific to an individual, which cannot be transferred |
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Marketable Wealth [examples] |
> property > shares > bank deposit accounts |
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Non-Marketable Wealth [examples] |
> penisons > life assurance |
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Name the different types of assets that wealth can be held in |
PHYSICAL ASSETS > property > land > art and wines FINANCIAL ASSETS > stocks > shares > bank deposit accounts |
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How is wealth distribution effected by age? |
Wealth is often skewed towards older age groups; the old have more time to build up savings and other forms of wealth than that of the young. |
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How is wealth distribution effected by gender? |
Men are wealthier than women |
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How is wealth distribution effected by race? |
White adults are wealthier than those from ethnic minority groups |
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Explain inheritance as a source of wealth |
Assets can be accumulated over generations, with each successive generation bwing wealthier than the preceeding one |
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Explain saving as a source of wealth |
Saving can accumulate wealth |
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What factors effect saving as a main source of wealth? |
> Size of income It is easier for high income earners to save than low income earners whose income is too low to allow saving or wealth accumulation > Age Older people in general have morw savings than younger people |
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Explain entrepreneurship as a main source of wealth |
There is increasing incidences of people becoming 'self-made' through taking a risk and successfully building up a business e.g. Richard Branson and Bill Gates |
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What are the main causes of Wealth Inequality? |
> Inheritance > Marriage > Income Inequality > Chance |
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What are the four main sources of wealth? |
> Inheritance > Saving > Entrepreneurship > Chance |
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Explain inheritance as a cause of wealth inequality |
Wealth inequality is created by large stocks of wealth passed down from one generation to another, which tends to perpetuate holdings of wealth among already wealthy famillies |
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Explain chance as a cause of wealth inequality |
> fortunes of business start-ups dpmay depend on chance > winning a probability-based competition depends on chance |
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Explain income inequality as a cause of wealth inequality |
i) High earners: > are better able to save and earn interest > have easier access to high-interest saving accounts ii) Individuals with a high propensity to save a high percsntage will build up more wealth than those with a small percentage |
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Explain marriage as a cause of wealth inequality |
Wealhy people tend to marry each other which reinforces the concentration of wealth among a small few |
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Income [definition] |
A FLOW of money to a factor of production |
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Distribution of Income [definition] |
How income is shared out between the factors of production |
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Name some different forms of income |
> salary/wage > rent > pension > investment income > Inheritance > transfer payments e.g, welfare benefits > interest |
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How do we measure the distribution of income? |
The Lorenz Curve |
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Lorenz Curve [definition] |
A means by which the degree of inequality in the distribution of income and wealth is measured and illustrated |
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Gini Coefficient [definition] |
A statistical measure of the degree of inequality of income and wealth |
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Gini Coefficient [calculation] |
A ÷ (A+B) |
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What does it mean if the gini coefficient = 0? |
Perfect equality |
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What does it mean if the gini coefficient = 1 |
Perfect unequal |
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Axis labels of the Lorenz Curve |
X-axis = % of population Y-axis = % of national income |
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What are the two types of income? |
> earned e.g. employment > unearned e.g. inheritance |
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Name some causes of income inequality |
> Level of skills and qualifications > Different conditions in labour markets > Wealth inequality > Different Earnings > Household Composition |
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How does the level of skills and qualifications cause income equality? |
> Individuals whose skills/qualifications are in high demand tend to get paid more > Over a lifetime, graduates earn more than non-graduates |
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How do different conditions in labour markets cause income inequality? |
The different supply and demand conditions in different labour markets results in a varied number of equilibrium wage rates. In some labour markets, the monopsony power of employers or lack of union power may result in the drive down of wages |
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How does wealth inequality cause income inequality? |
Wealthier households can earn income from their asset holdings in the form of dividends and interest |
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How do different earnings cause income inequality? |
Workers can earn different wages due to: > contract Full-time workers earn more than part-time workers > opportunities for overtime A job which offers overtime working hours will boost earnings |
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How does household composition cause income inequality? |
Individual households contain different numbers of employment |
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What ways can the government intervene to influence income and wealth distribution? |
> Taxation > Monetary benefits > Direct provision of goods and services > Legislation and labour market policy |
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Progressive Taxation [definition] |
A tax system where an individual's tax (as a % of their income) gets bigger as their income rises |
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Regressive [definition] |
A tax system where an individual's tax (as a % of their income) gets bigger as their income falls |
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What are the effects of taxation on income and wealth distribution? |
> Progressive taxation makes distribution MORE EQUAL > Regressive taxation makes distribution MORE UNEQUAL |
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What are the two types of monetary benefits? |
> universal e.g. child benefit > means-tested e.g. child benefit |
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How does Direct provision of goods and services help influence income and wealth distribution? |
They give all citizens equality of opportunity e.g. provision of free school meals, education and healthcare |
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How does legislation and labour market policy help influence income and wealth distribution? |
Legislation and Policy help to tackle: > those paid unfairly/illegally - Minimum/Living wage > workplace dicrimimation - Laws on equality > income inequality - Laws on discrimination |
