Cultural Differences Between Income And Wealth

The two terms income and wealth have mistakenly become identical in American culture. While the two concepts often go hand in hand, using the terms interchangeably can be misleading individuals. Conley differentiated these two terms on chapter 7. According to Conley, individuals think of the term income, when they consider economic status. Income is defined as the amount of money received by an individual for work, from transfers such as inheritances, gifts, or government assistance programs. In other words, the earning income occurs when an individual works, provides a service or product and is paid by an employer, a customer or a borrower. According to Conley, recently earning trends in US suggest that there an increase in inequality or divergence …show more content…
Using the terms income and wealth interchangeably obscure or confuse the reason for assessing how the financial system truly works. Simply, wealth is the value of everything a person or family owns, minus any debts. Assets include cars, home, other real estate, business properties, and financial forms of wealth like mutual funds, stocks, etc. Wealth does help in giving individuals an unfair advantage because distributing wealth can occurs when the government takes someone's earned income either through taxes or usage fees and gives it to another person. Another example is that an inherited wealth can give people an unfair advantage in life. It can make them lazy because they can live off profits, rents, etc. Wealth also can contribute to inequality problems, and inequality is a type of market failure. Market failure can occur when there is an inefficient share of resources in a free market. Another example of inequality that was identified by Conley is the Pizza example he gave on page 238, a person can be hungry and does not have the opportunity to get a slice of pizza while seeing others having the opportunity to eat more than 1 slice of pizza. In my opinion this example really shows the impact of