Inequality

Concept of Inequality:

The term inequality covers many things like power, prestige, status, recognition, freedom of choice, participation and so on. But here, inequality is used on the sense of inequalities in the distribution of income and assets. Economic inequality is the difference found in various measures of economic well-being among individuals in a group, among groups in a population, or among countries. Economic inequality sometimes refers to income inequality, wealth inequality, or the wealth gap. Economists generally focus on economic disparity in three metrics: wealth, income, and consumption.

Economic inequality varies between societies, historical periods, economic structures and systems. The term can refer to the cross-sectional distribution of income or wealth at any particular period, or to changes of income and wealth over longer periods of time. There are various numerical indices for measuring economic inequality. A widely used index is the Gini coefficient, but there are also many other methods.

Inequality can be destructive because it might hinder long term growth. However, too much income equality is also destructive since it decreases the incentive for productivity and the desire to take-on risks and create wealth.