Chapter 20

Income Inequality and Poverty

The U.S. Income Inequality is measured when you divide families by income into five groups.  In 2011 the bottom fifth of all families received 3.8% of all income and the top fifth received 48.9%. The Top 5 percent made 21.3% of all the income, leaving 26% of the remaining income to be distributed by the second, and third, and fourth income groups. When comparing to inequality around the world the comparison can be hard to measure because there are a lot of countries that do not have the data to compare to. When comparing the 25 most populous countries the available data shows that all of them have disparities between the rich and the poor. When the countries are ranked by inequality the U.S. ends up showing higher inequality disparity than most other economically advanced countries.  Other measures of inequality include what people care about such as: In Kind Transfers, Economic Life Cycle, and Transitory vs. Permanent Income. 

There are political philosophy groups such as Utilitarianism, Liberalism and Libertarian-ism that help choose policies to redistribute wealth. Those policies are: Minimum Wage Laws, Welfare, Negative Income Tax, In Kind Transfers and Anti- Poverty Programs and Work Incentives.  In conclusion, the measurement of inequality and poverty is difficult because of all economic, social and political factors involved.