Economic Inequality
High School
Definition
The uneven distribution of income and wealth among people in a society. High inequality can affect opportunity, social stability, and economic growth, and is a major focus of economic policy debates.
Worked examples
In 2023, the top 10% of U.S. households held 67% of total wealth while the bottom 50% held only 2%.
This gap shows high economic inequality — wealth is concentrated in a small portion of the population.
Country A has a Gini coefficient of 0.25; Country B has 0.55, indicating much greater income inequality.
Higher Gini values mean more unequal distribution of income across the society.
Common mistakes
- Economic inequality means everyone is poor. → Economic inequality describes the gap between rich and poor, not overall poverty levels. A wealthy nation can still have high inequality if income is unevenly distributed.
- Inequality and poverty are the same thing. → Poverty is low income; inequality is the uneven spread of income and wealth. You can reduce poverty without changing inequality if everyone's income rises proportionally.
- Zero inequality means everyone earns exactly the same amount. → Perfect equality is a theoretical benchmark; some income differences exist in all real economies. Complete equality is rare and may not account for differences in skills, effort, or roles.
Where you'll use it next
You'll analyze economic inequality when studying progressive taxation, welfare policies, labor markets, and debates over minimum wage and redistribution in economics and government courses.
See also
Economic DisparityLiving StandardsEquity and FairnessMeasuring Economic PerformanceGovernment Roles in the EconomyFiscal Policy
Reviewed by Pat Cheng, M.Ed. — StudyPug Curriculum Lead · Last updated June 6, 2026