INEQUALITY IN MONEY INCOME
|(a) distribution of what?|
|(b) distribution among whom?|
|(c) distribution how measured?|
Section 2.1 therefore presents the definitions of "income" and "household" which are necessary to get the discussion under way; section 2.2 examines alternative measures of the extent of inequality, while section 2.3 compares the current inequality of the American income distribution with that prevailing in other nations.
One should state at the outset that money income inequality is only a part of economic inequality. Statistics on the distribution of annual money income among existing households present only a snapshot of a complex and moving process. Some things (such as noncash fringe benefits, wealth, or leisure) are left out of the picture entirely, some things (such as income or family composition) may change drastically before the next snapshot is taken, and still other aspects of the picture (such as rental incomes) are very blurred and out of focus. These omissions are the subject of Chapter 3, but as we shall see there is plenty of complexity even in the snapshot which income distribution statistics present.
2.1.1 What Is Income? Economists usually distinguish between wealth and income by arguing that the former is a stock and the latter is a flow, but underlying both is the broad concept of "control over the use of society's scarce resources" (Simons, 1938:58). Wealth is then the total extent, at a point in time, of an individual's access to resources. Income (minus consumption) is the amount by which wealth changes during a given period of time. Or, as Hicks put it, income is "the maximum value a