In the United States, the richest quintile of the population receives 13 times as much income as the poorest quintile. However, the richest quintile only spends 4 times as much as the poorest quintile. Identify the possible reason or reasons for this stark difference between income inequality and consumption inequality. The poverty line does not reflect relative poverty. Intergenerational mobility allows children to consume more than their parents. The richest quintile has the ability to save a larger percentage of its income. Individuals experiencing temporary fluctuations in their incomes are more likely to maintain moderate spending habits. O O
In the United States, the richest quintile of the population receives 13 times as much income as the poorest quintile. However, the richest quintile only spends 4 times as much as the poorest quintile. Identify the possible reason or reasons for this stark difference between income inequality and consumption inequality. The poverty line does not reflect relative poverty. Intergenerational mobility allows children to consume more than their parents. The richest quintile has the ability to save a larger percentage of its income. Individuals experiencing temporary fluctuations in their incomes are more likely to maintain moderate spending habits. O O
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter12: Income Distribution, Poverty, And Discrimination
Section: Chapter Questions
Problem 17SQ
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