ch 20

Question 1

define gini coefficient

Answer 1

measure of inequality that calculates how much actual income distribution deviates from perfect equality

Question 2

define R factor

Answer 2

redistribution factor
% difference between Gini coefficient based on market income and Gini from after tax/transfer incoen

Question 3

what is the poverty line

Answer 3

line that classifies households below it as poor based on income

Question 4

define poverty rate

Answer 4

% of population with family income below poverty line

Question 5

LICO income measurement acronym

Answer 5

low income cut off

Question 6

define LICO income measurement

Answer 6

only in canada
when people spend 20% above average % of income on necesities

Question 7

problems with LICO

Answer 7

not adjusted for inflation since 1992
inaccurate for poverty (ex. own a house but retired, no income)

Question 8

LIM acronym

Answer 8

low income measure

Question 9

define LIM income measurement

Answer 9

used internationally
poverty threshold is 50% of median income

Question 10

define median

Answer 10

the middle number in an ascending/descending list

Question 11

problem with LIM and LICO

Answer 11

both relative
better for measuring income inequality rather than poverty

Question 12

MBM acronym

Answer 12

market basket measure

Question 13

define market basket measure
income measure

Answer 13

official canada poverty line
based on cost for basic needs for diff sized families

Question 14

define proposed absolute absolute measure
income measure

Answer 14

try to measure costs of basic needs
hard to define

Question 15

define in kind transfer

Answer 15

low income household receives non monetary assistance
hard to value

Question 16

define economic life cycle

Answer 16

standard of living depends on place in income life cycle
(just entering work force vs retired)

Question 17

define transitory income

Answer 17

temp. unexpected change in income that is not expected to continue in the future

Question 18

define economic mobility

Answer 18

movement between income categories through lifetime

Question 19

define inter generational mobility

Answer 19

persistence of economic success through generations

Question 20

calculation of generational elasticity of earnings

Answer 20

%change in sons earnings/%change in dads earnings
NOT WOMEN

Question 21

define utilitarianism

Answer 21

max total utility
redistribute based on diminishing marginal utility

Question 22

weakness of utilitarianism

Answer 22

incentivizes everyone to work less hard and get govt handouts

Question 23

define diminishing marginal utility

Answer 23

one extra dollar gives less utility to rich person than poor person
makes less of an impact

Question 24

define liberalism/leftism

Answer 24

want to maximize minimum utility
beforelife
kind of social insurance

Question 25

define maximin criterion

Answer 25

want to maximize utility of worse off person in society

Question 26

who made liberalism

Answer 26

john rawls

Question 27

who made utilitarianism

Answer 27

jeremy bentham
john mills

Question 28

define libertarianism

Answer 28

want equal opportunities, not equality of outcomes
govt should prevent theft etc but not redistribute income

Question 29

who made libertarianism

Answer 29

robert nozick

Question 30

define welfare

Answer 30

supplemental income for low earning households
reduce incentive to work
help families with kids, disabled, can’t work

Question 31

pros of minimum wage laws

Answer 31

employees benefit from higher wages
some think demand for unskilled labour is inelastic

Question 32

cons of minimum wage laws

Answer 32

higher unemployment in low skill

workers critics argue labour demand is elastic long term

Question 33

what is universal basic minimum income

Answer 33

if you earn under a certain amount h get tax subsidies
don’t pay taxes

Question 34

pros of in kind transfers

Answer 34

better than having money for drugs

Question 35

cons of in kind transfers

Answer 35

disrespectful and hard to know what ppl need most

Question 36

define employment insurance

Answer 36

you pay and get relief when you lose your job and it wasn’t your fault