- Define and explain Inequality Explored in your own words
- Use key terms such as Gini coefficient accurately
- Apply what you have learned to new examples and questions
- Avoid the common mistakes learners make with this topic
This lesson focuses on Inequality Explored: explore income gaps within and between countries.
Explore income gaps within and between countries.
Key ideas
Beyond GDP
GDP per capita misses health, education and the environment. The HDI combines income, schooling and life expectancy; critics note it still hides inequality and environmental damage. Sen's capabilities approach goes further, asking what people are actually free to do and be.
Why poverty persists
Debated causes include colonial legacies, weak institutions and corruption, geography and disease burden, rapid population growth, and poverty traps where low income means low saving, low investment and low growth. There is no single cause — and no single cure.
Key term — Gini coefficient: A 0-to-1 measure of income inequality, where 0 is perfect equality and 1 means one person has everything.
Country X has GDP per capita of $8,000 and HDI 0.72; Country Y has GDP per capita $6,000 and HDI 0.78. Which is more 'developed'?
On GDP per capita alone, X looks more developed. On the broader HDI measure, Y scores higher. The HDI includes health and education, not just output. Y converts its income into wellbeing more effectively.
Answer: On the broader HDI measure, Y is more developed despite lower income — development is about more than output.
- Treating all inequality as purely bad Some inequality can reward enterprise, but extreme inequality harms health, mobility and social cohesion — the level and causes matter.
- Equating growth with development Growth raises output; development improves lives — growth without schools, clinics or rights may leave most people behind.
Practice
Income (GNI per capita), life expectancy and education.
Perfect income equality.
Any one of: ignores health and education, ignores inequality, ignores the environment and unpaid work.
A cycle where low income means low saving and investment, which keeps income low.
Quick check
Which of these best defines "Gini coefficient"?
Why did the East Asian tigers develop rapidly?
Give one advantage and one disadvantage of FDI for a developing country.
- Inequality Explored: explore income gaps within and between countries.
- Beyond GDP: GDP per capita misses health, education and the environment.
- HDI: The Human Development Index: a composite of income, life expectancy and education, scored 0 to 1.
- Watch out for: treating all inequality as purely bad