Inequality 101

Inequality 101 — Short Course from Institute for New Economic Thinking

Economic and social inequality takes many forms. Class — a group designation — is one of them; in former times it was more rigidly defined than it is now, but it is still present among us. Rank tells an individual’s place in the scale of achievement, income, and power. Wealth is a concept that describes the financial valuation of personal or household possessions; it is a stock of things owned. Income is a flow of accessible resources, measured through time. Across nations, citizenship establishes a hierarchy of entitlement to common goods and protections, such as social insurance and health care. Within households, family and gender roles establish a hierarchy of power and privilege. Each of these is a dimension of inequality.

Economists tend to be especially interested in inequality of three types: pay, income, and wealth. That is not because these are necessarily the most important forms. Compared to (say) inequalities of race or gender, they may or may not be most closely tied (for instance) to stress, happiness, and the sense of justice or injustice. But we economists tend to study what we can most easily measure. And money is our measuring rod. It may be a warped and twisted rod — it is in fact both warped and twisted — but we use it because it’s there. We use it in the hope that, by using it, we may discover something worth knowing of the world.

— Galbraith, James K.. Inequality (What Everyone Needs To Know®)