ECON 001 Lecture Notes - Lecture 14: Proportional Tax, Deadweight Loss, Sales Tax
Document Summary
The distribution of income is not divided equally. The more equal the income distribution, the closer we will be to the line of equality: income distribution. The less equal the income distribution, the further away we will be to the line of equality: wealth distribution. Explain the difference between income and wealth: income flow of money that comes in per year, wealth stock of the assets the household has (ex: house, stock, retirement funds) Need to be able to save but for the lower end of the distribution, it"s very difficult: which is closer to the line of equality? (income distribution or wealth distribution) Inequality in wealth is more unequally distributed than income. To measure inequality as an index number, we use the gini ratio/gini. In a society of full equality, the gini ratio would equal zero: closer to zero more equality.
