Income equality is usually viewed against its counterpart, income inequality. Income equality refers to a situation in which every member of the group or society receives income in what is perceived as an equal way.
The Gini coefficient is a national grid that measures differences in global income equality. A number between 0 and 1 is used to indicate perfect equality or perfect inequality. Zero stands for perfect equality, in a situation where all people have the same income, and the number 1 stands for perfect inequality where one person earns all the income.
Studies have shown the differences across countries according to national incomes. World Bank records indicate that countries showing the highest level of inequality regarding income are found in Latin America, with Colombia the most unequal. Countries in Asia are shown to verge toward lower levels of inequality of income. Thus, among the Chinese 20 percent receive incomes of approximately eight times those of the poorest 20 percent. Thailand's ratio comes out at 15:1. In Qatar, income is not distributed equally, albeit individual incomes there are among the highest in the world. The richest members accrue 13 times as much income as the poorest in Qatar society.
There is generally a great disparity worldwide with regard to income received. The consequence of this is an economic reality of income inequality. Economic equality would refer to an equalizing of income across the spectrum. However, as much as it has been raised as a question for discussion, a clear definition of specific meanings remains out of view. It is unclear what would be considered a fair distribution of income to create a system of income equality. Critics state that there are no objective criteria by which to apply income redistribution. They posit further that in an attempt to decentralize finances, control would land up among a centralized group of public officials, creating issues of power economically and politically.
Egalitarians are vehemently opposed to the concept of such disparities in income that one part of the population may be living in luxury while the other faces abject poverty. They argue that both within countries and across nations there should be no such differences. Although they do not advocate salaries being the same across the board, given the different desires and goals of individuals, they propose a greater level of income equality.
The debate also raises issues regarding the relationship between income equality and inequality, and aspects of socialism and capitalism or free enterprise.
Discussions about enhanced economic growth are often associated with the notion of a more equal distribution of income. Recently there has been a marked difference in income potential as seen in different countries and across classes and groups. Strategies have been suggested by economists, with various methods suggested to apply income distribution.
Income redistribution may be one method that has the potential to create an enhanced level of equality. Income distribution is an economic term referring to the distribution of income within a nation's population. The term is synonymous today with income inequality in the current climate. Economic growth is also closely aligned to factors such as income inequality and income distribution.
The issue at stake is an economically and politically charged one, with questions as to how the government can best redistribute income from those with greater income capacity to those with less.
Richard G. Wilkinson and Kate Pickett, in their 2009 publication The Spirit Level: Why More Equal Societies Almost Always Do Better, show the suffering that takes place when there is a high degree of income inequality in a society. They write that both the rich and poor in wealthy countries suffer under these circumstances. Wilkinson and Pickett's book includes a comparison of social outcomes related to countries with high levels of income inequality and those with low levels of income inequality.
The United Kingdom, one of the most unequal income countries along with Portugal and the United States, demonstrates low levels of interpersonal trust, according to Wilkinson and Pickett's study. In addition, mental health is rated as poor, with high levels of violence, drug and alcohol abuse, teenage pregnancies and crime. Health problems, including a propensity towards being overweight and decreased life expectancy, are among further aspects of an unequal income society.
The Spirit Level: Why Equality is Better for Everyone contains the message in its title. The assumption is that income equality is best for everyone, not only those experiencing low income. Critics in favor of this policy argue the need for corrective measures to insure a greater level of economic equality.