Introduction Flashcards

1
Q

Definition of Income:

A

Amount of money made during a specific period (what you earn).

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2
Q

Definition of Wealth:

A

Net Worth (Value of Assets - debts/liabilities).

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3
Q

Which is a bigger problem: wealth inequality or income inequality?

A

Wealth inequality.

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4
Q

The inheritance system perpetuates__________.

A

Inequality.

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5
Q

What 9 things would result it the government took everything from someone after they die?

A

1) Incentive Argument: People are less likely to work hard.
2) It would encourage overspending during life.
3) Heirloom Argument: The government holds no value with some pieces of property.
4) Inter Vivos Gifts would become more prevalent.
5) Equal opportunity argument: government taking property still doesn’t give everyone equal opportunity.
6) Very likely would be unconstitutional.
7) Less attentive to elderly.
8) People would leave the country.
9) Violates human nature.

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6
Q

How the inheritance system is good for donees:

A

1) Provides donees with better opportunities.
2) Provides psychological benefit of knowing you don’t have to worry about money.

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7
Q

How the inheritance system is bad for donees:

A

1) Distorts donee’s incentives to work.
2) Erodes the notion that work is a principle of life.
* If you think work builds morals—inherited wealth is bad.
3) Shows young people they are largely unaccountable to anyone.
4) Makes donees an obvious target.

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8
Q

How inherited wealth is bad for society:

A

1) Perpetuates inequality.
2) nothing to do with merits in getting that amount of money (undermines equal opportunity).
3) High concentrations of wealth.
- Rich less likely to support public amenities.
- The middle class give up when they think they can’t get ahead.

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