Economists talk about two types of economic inequality: wealth and income inequality.
Income inequality looks at how big the differences in what people get paid are in the economy.¹ Income can means wages, but also all the earnings people make from owning shares, rent and profits from selling companies. Over the last few decades, income inequality within countries has been rising.² The top earners are earning more and more, while average earners are seeing their wages stagnating or rising at a lower rate.
Income inequality doesn’t cover all the bases of how people’s economic situations can differ, however. Another term is wealth inequality. Wealth inequality measures how a small group of people in the world own most of the worlds stuff. This stuff can be everything from homes and cars, to financial assets and shares in businesses. People can be ‘wealthier’ without necessarily increasing their income, for instance by owning assets like buying a share of a business or owning a house.
Wealth inequality has huge and has only been increasing over the last few years. Oxfam reported that in 2016, we live in a world where the wealthiest 62 people own as much as the poorest half of the world's population. In 2010, it was the top 388 people and last year the top 80.³
But it’s not just about the money. Even if we all started with the same income and wealth, inequality would still be there, for reasons that economics might not always take into account. Someone with certain physical disabilities might need much to invest in much more infrastructure around them - ramps, lifts, wheelchairs - than an able-bodied person in the same financial situation. A single parent living in a society with no public social care would have a much harder trade-off to make between caring for their child and going to work than a single parent on the same income in a society with a bigger social care sector. So when it comes to economic inequality, the problem runs deeper than just differences in our finances.