Content Tagged: literacy

Measuring Inequality

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December 5, 2013

How do you measure the wealth/income gap?  Although seemingly a straightforward question, as with many things, the real answer is: it depends.  Every once in awhile, a video comes across Facebook feeds showing the “real” inequality of income in the United States.  Then, there are blog posts like this one from the Wall Street Journal, looking at the income gap.  So, as educators, we look for what we think is a reliable source, and come up with this statement and visual from the 2010 census showing the share of household income by quintile.

How can we tell what’s “true”?

Income inequality is a measurement of the distribution of wealth.  It compares households across a region (or country, or the world), and is traditionally measured by economists using the Gini coefficient.  A Gini coefficient of zero means that everyone earns the same income, and a coefficient of one means that one person holds all the income and everyone else has zero.  Why do we care?  Income inequality measures are used to justify policy aimed at income distribution, including taxes, Social Security overhauls, Medicare and Medicaid, and health care decisions. For example, if we, as a society, think that we must change Social Security to be more “fair”, that would more than likely lead to an increase in personal income taxes.  What effects do these decisions have on us as citizens and consumers?

Many beliefs about income inequality tie in to political and economic beliefs about the role of government.  Is it the government’s responsibility to ensure that the Gini coefficient is at a “good” point?  Who decides that point?  What trade-offs must occur in government and society in order to decrease inequality of the distribution of wealth?

One reoccurring theme in the UFR curriculum notes that the national budget reflects national priorities.  Although it would be very easy to link income inequality to UFR Lesson 1.4 (Taxation), it is also an implicit part of the lesson in 1.1 (Social Security and the National Debt), 1.2 (Medicare and the National Debt) and, when graphs and charts are used for analysis, encourages student growth of analytic critical thinking skills.  An overarching question of “Is it the government’s responsibility to ensure that there is equal distribution of wealth?” could be a point to return to throughout a unit on the national debt.  Student answers may change throughout the unit, or throughout the course, depending on what data is gathered and analyzed.

So, there’s the formal economics of income inequality.  But, the question remains:  how can we tell what’s “true”?  After all, data is analyzed differently by disparate groups.  How could this be brought into the classroom to determine (1) reliability of sources, (2) reliability of data, (3) reliability of reporting, and (4) the reliability of using these resources to guide national policy?

This could be a great connection not only to having students learn about income inequality, but also building skills in map and graph interpretation, and bias in sourcing.  Teachers could start by pulling different sources – the video mentioned in the first paragraph, the WSJ blog, and the census data, as well as sources found on your own.  Encourage students to take some time to do a close read on the information from different sources.  Students should also read the comments on the blog from the WSJ, where people disagree with the blogger’s opinion, or how the Gini is determined, or even when the Gini is determined (Before taxes?  After taxes?).  How do all of these effect what we see as the Gini coefficient?  What does it mean to be a reliable source?  Which data set is “true”?  Which data set should be used to help guide federal policies to decrease income inequality, which President Obama has stated is a goal for his next three years in office?

Other resources for teaching income inequality:

 

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Council for Economic Education

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The Council for Economic Education offers comprehensive K-12 economic and personal finance education programs, and envisions a world where people are empowered through economic and financial literacy and make informed and responsible choices in their daily lives.

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