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week 03 - Lecture 3: Poverty, inequality and social...

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Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 1 Lecture 3: Poverty, inequality and social exclusion 1 Conceptions of social justice 2 Defining and measuring income 3 Problems in defining and measuring inequality 4 Problems in defining and measuring poverty 5 Different approaches to targeting 6 Social exclusion Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 2 1 Conceptions of social justice • Libertarians • Liberals • Social democrats • Marxists Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 3 2 Defining and measuring income • Distinguish wealth and income • Types of wealth • Financial wealth • Physical wealth • Human capital Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 4 A theoretically sound definition of income Full income = money income + non-money income Where: Money income = wage income + non-wage income Non-money income = job satisfaction + flow of services from physical capital + own production + leisure Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 5 3 Problems in defining and measuring inequality • Explaining away income differences • Difference choices – Different tastes about money income – Differences in acquired skills • Age • Year to year variation • Contributing to income differences • Differences in family size • Different prices Nicholas Barr, EU456/SA4F7 Lecture 3, T 2010 6 Different aggregate inequality measures • There are many measures of aggregate inequality, including • the decile ratio • the Gini coefficient • the Atkinson measure • None is definitive • But they are useful for addressing questions like • Is the UK more unequal today than in 1997? • Is the UK more unequal than the EU average?
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week 03 - Lecture 3: Poverty, inequality and social...

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