distribution of income and wealth
distribution of income and wealththe spread of material resources in a society This is an indicator of social inequality for, by identifying the trends in the spread of resources, it is possible to ascertain whether a society is becoming more or less equal. ‘Income’ refers to the material resources obtained in the form of wages and salaries; through social benefits and pensions; through interest paid on investments; and from rents. There is no precise definition of WEALTH, but it generally refers to the accumulation of resources, both monetary and non-monetary Although the number of'S elfmade’ rich people has increased, inherited wealth is still a vital element in any examination of who is wealthy Being wealthy is a relative notion. For example, there are a number of people who might be considered ‘super rich’ who own over one billion pounds. A Gallup Poll undertaken in 1986 showed that over two thirds of the population believed someone to be wealthy if their level of wealth was over £200,000. Coincidentally, this corresponded to the level of wealth enjoyed by the richest 1% of the population.
Examining the distribution of income and wealth is very difficult for three reasons:
- the data are often inaccurate;
- the most appropriate unit of analysis is difficult to determine and might refer to individuals or families or households;
- it is difficult to evaluate non-monetary assets.
The Royal Commission on the Distribution of Income and Wealth (1974-79) used income tax returns to examine income distribution, supplementing its findings with data from the FAMILY EXPENDITURE SURVEY and the New Earnings Survey. Between 1976 and 1977 it found that the top 50% of the population received 75.9% of all income. Taxation slightly reduced this. Between 1979 and 1989, however, there was evidence of widening inequalities in income distribution. Between 1979 and 1987, for example, the top 20% of earners in the UK enjoyed a 22% increase in income, which is six times that of the bottom 20%. The Royal Commission found that wealth distribution, so far as it could be determined, was less equally distributed than income. That trend has continued. Between 1979 and 1988 inequalities in both disposable and final incomes widened. (‘Final income’ refers to ‘disposable income’ after the payment of indirect taxes, such as VAT and the council tax, and after the receipt of government benefits such as health and education services.)
All the evidence is that inequality has increased over the last two decades. This increase appears sharper in the US and UK, where the new economic policies associated with THATCHERISM have been especially pursued, and less in Europe where they have not. On a world-scale – and one aspect of GLOBALIZATION – the gap in incomes between the richest and poorest nations has also increased. See also POVERTY, CLASS, UNDERCLASS.