Gini coefficient

It condenses the entire income distribution for a country into a single number between 0 and 1. When the numbers higher it means there is greater income inequality .

If it’s above 0.4 inequality is frequently assocaiGed with political instability and growing social tensions.

The latest value for the Gini Coefficient in the UK is a figure of 0.35.

Ways the level of inequality of income and wealth can be measured

• Share of income going to different groups in society, e.g. the poorest 20% of households at the bottom of the income scale through to the richest 20%
• The proportion of all households who live on an income below an official poverty line
• For the UK and other EU countries, the current poverty line is an annual income of less than 60% of median income. The median individual is in the middle of the income distribution
• Gini co-efficient

Key causes of income and wealth inequality

• Education- people will not have the skills and training required to be able to have some jobs which are typically higher paid. Therefore, they will lack experience to get other jobs in the future
• Age discrimination or unfair treatment based on a person’s age can impact on someone’s confidence, job prospects, financial situation and quality of life.
• Ownership of financial assets- people of a higher income are increasingly investing in stocks and shares, which is leading to the rich becoming richer, however the ‘trickle down effect’ is not occurring as this is a self-benefitting investment