Economic inequalities are most obviously shown by people’s different positions within the economic distribution – income, pay, wealth. However people’s economic positions are also related to other characteristics such as disability, ethnic background, gender and more. We will now reflect on the gap between the well-off and the less well-off in the overall economic distribution.
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Types of Economic Inequality
There are three main types of economic inequality:
1) Income inequality
Income inequality is the extent to which income is distributed unevenly in a group of people.
Income is not just the money received through pay. Income refers to all the money received from employment, investments, savings, state benefits, pensions and rent. Measurement of income can be on an individual or household basis, meaning, and the incomes of all the people sharing a particular household.
2) Pay inequality
Pay inequality describes the difference between people’s pay and this may be within one company or across all pay received in a certain country.
A person’s pay is different from income. Pay refers to payments received from employment only. This can be an hourly, monthly or annual basis, with typical bonuses included.
3) Wealth inequality
Wealth inequality refers to unequal distribution of assets in a group of people.
Wealth refers to the total amount of assets of an individual or household. This may include financial assets such as bonds, stocks, property and private pension rights
Economic Inequality in numbers
Probably the most common way to think about global inequality is to measure the gap between the richest and the poorest countries in real income per capita. Data shows that in 1960, at the end of colonialism, people living in the world’s richest country were 33 times richer than people living in the poorest country.
Measurement of the gap, in real terms, is also done by measuring between the GDP per capita of the world’s dominant power (United States) and that of various regions of the global south.
Using World Bank figures, data shows that since 1960, the gap for Latin America has grown 206%, the gap for sub-Saharan Africa has grown by 207% and the gap for South Asia has grown by 196%. In other words, the global economic inequality has roughly tripled in size.
Over the past few decades inequality has become so bad that, in 2000, Americans were nine times richer than Latin Americans, 72 times richer than sub-Saharan Africans, and a mind-popping 80 times richer than south Asians. These numbers give us a sense for how unfairly the global economy distributes our planet’s wealth.