3.4 - Measuring Inequality & Poverty - Macro Objectives - IB Economics

What This Video Is About

This video is an introduction to the economics of inequality and poverty, which is part of the macroeconomics topic. It covers the meaning of economic inequality, the difference between income and wealth, and how to measure poverty.

Major Ideas Discussed

• Economic inequality refers to the unequal distribution of income and wealth, with income being the money earned by households and wealth being the net assets.
• The Lorenz curve is a graphical representation of the spread of income within a country, with the line of equality being a 45-degree line where everyone has the same income.
• The Gini coefficient is a number between 0 and 1 that measures income inequality, with 0 representing perfect equality and 1 representing perfect inequality.
• Absolute poverty is defined by reference to some agreed standards, such as the World Bank's international poverty line of $3 per day per person, while relative poverty is when income is compared to normal levels within a country.
• Measuring poverty can be challenging due to difficulties in conducting surveys, finding a representative sample, and variations within a country.

What to Watch Next

Viewers can expect to learn more about the causes of inequality around the world and what governments can do about it in the next video, as well as calculations for HL in the third video.