Abstract

Evidence is presented showing that inequality of incomes rose sharply in the UK for two decades, from the late 1970s, reaching a level unprecedented in modern times, remaining at that high level since then. The same has been true in the US and to a greater or lesser extent in many other countries. This is reflected in the increased share of total incomes received by higher earners, and in the greater gains from GDP growth accruing to those higher up the incomes scale. Some economic basics are spelt out. The term economic inequality embraces both income inequality and wealth inequality. The latter is even more unequally distributed and has continued to rise in recent decades. Measures of economic inequality include the popular Gini coefficient and percentile ratios such as the P80/P20 and summed ratios such as the S80/S20. Estimates of income inequality are often based on a household’s total disposable income, after taxation, adjusted for household size. There are further complications in assessing wealth inequality. The complexities surrounding economic inequality contribute to confusion, providing scope for obfuscation, and opportunity to deny the subject’s importance.