Equity Vs Equality Flashcards
Private or market income
income that is received in the market place primarily as a result of individual making a contribution to the production process (factor income).
Such as wages, salaries, interest and dividends.
Gross income
→ Private or market income plus direct cash benefits received from governments such as pensions, family tax benefits and job search allowance.
Disposable income
gross income less the direct taxes levied by governments (personal income tax)
Social wage income
disposable income plus indirect government benefits provided in the form of goods and services (e.g.
education & health)
Final income
social wage income less production or indirect taxes.
Discretionary income
the income available for consumption on goods and services following the payment of unavoidable expenses (mortgage, rent, direct)
Equivalised household income
Disposable income of a household adjusted to take into account the size and composition of the household
Nominal income
is the number of dollars of income received by an individual measured over a period
of time, and does not take into account its purchasing power.
Real income
• is equal to a person’s nominal level of income after accounting for the impact of
changes in the general price level (inflation). This is a guide to its purchasing power
Change in real income in terms of :
inflation and nominal income
Inflation > rise in nominal income = fall in real income
- Inflation < rise in nominal income = rise in real income
- Inflation = rise in nominal income = no change in real income
Equality
mean that everyone would have equal access to good, services and incomes. (Even)
Equity
is more related to fairness whereas equality is more related to evenness (Fair)
Absolute poverty
When people live with insufficient income to purchase basic goods and services
eg: food , clothing
Relative poverty
Exists when a household has low incomes compared to what is needed to maintain reasonable living standards (measured by Henderson poverty line)
