Download The Distribution of Wealth and Income

The Distribution of
Wealth and Income
Poverty
A relative term that compares what
personal wealth people have in a given
area
Poverty
A relative term that compares what
personal wealth people have in a given
area
Poverty in the US is not the same as
poverty in other countries
Poverty
A relative term that compares what
personal wealth people have in a given
area
Poverty in the US is not the same as
poverty in other countries
In other countries, that may mean
starvation, In the US: below $23,550 per
year for a family of 4
Poverty
A relative term that compares what personal
wealth people have in a given area
Poverty in the US is not the same as poverty
in other countries
In other countries, that may mean starvation,
In the US: below $23,550 per year for a
family of 4

This # is calculated by identifying the cost to
feed the family, multiplied by 3
US Poverty Line
Problem: It is estimated that in
America, the food expenses represent
just 1/5 of the household budget (not
1/3)
Other costs, housing, health care,
childcare, transportation eat up a larger
share of the budget
Is the poverty line accurate?
Wealth vs. Income
Wealth – the accumulation of value
Wealth vs. Income
Wealth – the accumulation of value
Income – is the flow of value
Wealth vs. Income
Wealth – the accumulation of value
Income – is the flow of value

It is possible to have wealth (nice house)
but have low income
Wealth vs. Income
Wealth – the accumulation of value
Income – is the flow of value
It is possible to have wealth (nice house)
but have low income
 It is possible to have high income, but no
wealth (spent it all)

Income Distribution
Who has the money???
Income Distribution
Who has the money???

This can be measured by the Lorenz Curve
which shows the distribution of wealth in
the economy
Lorenz Curve
100 %
Line of Perfect
Equality
Distribution of
Income
Lorenz Curve
0
100 %
Family Groups
Income Distribution
Who has the money???
This can be measured by the Lorenz Curve
which shows the distribution of wealth in
the economy
 The closer the Lorenz curve is to the line of
equality, the more equal the distribution of
income

Lorenz Curve (Near Equal)
100 %
Line of Perfect
Equality
Distribution of
Income
Lorenz Curve
0
100 %
Family Groups
Income Distribution
Who has the money???
This can be measured by the Lorenz Curve
which shows the distribution of wealth in
the economy
 The closer the Lorenz curve is to the line of
equality, the more equal the distribution of
income
 The further from the line, the more unequal
the distribution

Lorenz Curve (Unequal)
100 %
Line of Perfect
Equality
Distribution of
Income
Lorenz Curve
Family Groups
0
100 %