The Lorenz Curve

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Oct 28, 2013 (3 years and 5 months ago)

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The Lorenz Curve

Warm Up:

What are three jobs that get high paying salaries?


What are three jobs that get low paying
salaries/wages?

What do people earn?


Income Distribution
:


an economists way of studying
wealth

and
how it is disbursed among the
population
;
families are grouped together by income into
five

categories


The Lorenz Curve

An
economic model

that compares
real
income

distribution of wealth as compared to
perfect equality
.


The Lorenz Curve


% OF TOTAL POPULATION


% OF



TOTAL


INCOME

20

20

40

40

60

60

80

100

80

100

3.6

12.6

27.6

50.8

100

What would
socialism, or
perfect equality
look like?

U.S. Lorenz Curves

% OF



TOTAL


INCOME


% OF TOTAL POPULATION


1995

2000

2010

What are
these curves
telling us
about
income
distribution
in the U.S.?

Warm Up
:


What does Paris Hilton have that
you do not have, and what do
you have that Paris Hilton does
not have?


Why do some people make more
then others?

Why is there Income Inequality
?

(1)
Wealth



born into it (family)

(2)
Education



the more you
have the more $$ you will earn

(3)
Ability ~ Skill ~ Talent ~
Beauty

(4)
Power



monopoly or political

(5)
Luck



pure dumb luck

Top Ten!!

10. Education

9. Furniture/appliances

8. Clothing

7. Entertainment

6. Healthcare

5. Utilities


public services

4. Insurances & pensions

3. Food

2. Transportation

1. Housing

Biggest areas of
consumer expense in
USA

The Bottom 20%


Poverty:


families and individuals are defined as living
in poverty if their incomes fall below certain
levels.


current poverty level for a family of 4:
$22,050


{however, at twice the poverty line


or
$43,000 for a family of four


a family is much
closer to meeting its minimum needs.}

How does Gov’t Help?


Anti
-
poverty measures:


Food Stamps


Welfare


Social Security Insurance


Workfare


WIC


women, infants, & children


Medicaid


College Loans


Low Mortgage Rates


Public Housing

Measuring Health of our Economy


Gross Domestic Product (GDP
):


The dollar amount of all final goods and services
produced within a country’s national borders in a
year. It measures our national output.


Exclusions from the GDP


There are four types of products that are excluded
from the GDP; this tells us that it is not a true
reflection of U.S. economic activity. Page 343 in
your text, list, define and write example
S

of each
one:


Be Ready for a Top Ten!!!

What countries have the highest
GDP??

Highest GDP 2010


10. Canada

9. Russia

8. Italy

7. Brazil

6. United Kingdom

5. France

4. Germany

3. Japan

2. China

1. United States

Top Ten Richest Countries, per capita

10. U.K.

9. Netherlands

8. Sweden

7. Switzerland

6. Denmark

5. Ireland

4. Iceland

3. Qatar

2. Norway

1. Luxembourg

10. Canada

9. Russia

8. Italy

7. Brazil

6. United Kingdom

5. France

4. Germany

3. Japan

2. China

1. United States

Top Ten Fun!!

10. Canada


23

9. Japan


25

8. Switzerland


27

7. Turkey


35

6. England


49

5. Germany


49

4. India


50

3. China


78

2. Russia


82

1. USA


435!!!

Countries with the
most Billionaires